The issue is relatively simple. Many large unions, like many large employers, self-insure their members’ medical costs rather than joining a traditional insurance plan. They do this to retain flexibility, control costs and keep more money in the pockets, understanding the role and risks of serving as the insurer. About 60 percent of insured American workers are in self-insurance plans, union and non-union alike.
Already, the big-insurance company plans are more expensive than self-insured plans, and with ObamaCare coming on line, the price difference could hit double digits. The results are predictable: More employers of all sizes and unions will look to the cheaper self-insurance options. And that is a threatening force to the insurance companies and to the very viability of ObamaCare, because it could shrink the sign-up rate for the new marketplace exchanges that will make or break the law’s success.
The quiet assault is starting to get more brazen. Consider that the Center for American Progress, a liberal Washington think tank, has openly declared war on self-insurance.
In a whitepaper entitled “The Threat of Self-Insured Plans Among Small Businesses” – and it could have just substituted “unions” for “small businesses” – this group predicts that the increasing popularity of self-insurance will “cause an insurance premium death spiral and threaten the stability of the [Obamacare] exchanges.”
A death spiral!
What’s more, the group argues that federal policymakers should actively work to “halt this shift” to self-insurance and “discourage this behavior” by prohibiting the sale of stop-loss policies to small businesses, a crucial component of self-funding programs that keeps one huge claim from wiping out a business.
Why should anyone “halt” a fundamental insurance option for the American union worker? Wasn’t the point of ObamaCare to provide more affordable health insurance to more people?
The campaign to undermine self-insurance has a twist that Capitol Hill lawmakers might find particularly interesting. As the Center for American Progress suggests, all this can be done without involving Congress, because halting a self-insurance boom requires “only regulatory action,” not legislation.
With all the economic struggles Americans are facing, there is broad appeal to the promise of health care for all. But what we really want is good health care, with the most flexibility possible, and at the lowest costs. If self-insurance is the best path for small business, school districts, or unions, they should have the ability to make that choice. But the insurance companies and their allies among health care unions have a different agenda: they simply want to drive up government spending to feather their own nests. So rather than compete on price with self-insured plans, they are waging an anti-consumer, anti-competitive war on self-insurance. The answer to this dilemma is clear: Government regulators must not allow insurance companies, and their allies among health care unions, to block consumers from affordable health care. It’s time for our regulators to take a hard look at this secret war and expose it before working men and women, union and non-union alike, are forced to pay more for health care.
Mackell is president of the Association of Benefit Administrators, a former chairman of the Federal Reserve Bank of Richmond and life-long advocate for union workers.