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115th Congress   }                                 {     Rept. 115-53
                        HOUSE OF REPRESENTATIVES
 1st Session     }                                 {            Part 1

======================================================================



 
                     SELF-INSURANCE PROTECTION ACT

                                _______
                                

                 March 20, 2017.--Ordered to be printed

                                _______
                                

Ms. Foxx, from the Committee on Education and the Workforce, submitted 
                             the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 1304]

    The Committee on Education and the Workforce, to whom was 
referred the bill (H.R. 1304) to amend the Employee Retirement 
Income Security Act of 1974, the Public Health Service Act, and 
the Internal Revenue Code of 1986 to exclude from the 
definition of health insurance coverage certain medical stop-
loss insurance obtained by certain plan sponsors of group 
health plans, having considered the same, report favorably 
thereon with an amendment and recommend that the bill as 
amended do pass.
    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Self-Insurance Protection Act''.

SEC. 2. CERTAIN MEDICAL STOP-LOSS INSURANCE OBTAINED BY CERTAIN PLAN 
                    SPONSORS OF GROUP HEALTH PLANS NOT INCLUDED UNDER 
                    THE DEFINITION OF HEALTH INSURANCE COVERAGE.

  (a) ERISA.--Section 733(b)(1) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1191b(b)(1)) is amended by adding at 
the end the following sentence: ``Such term shall not include a stop-
loss policy obtained by a self-insured health plan or a plan sponsor of 
a group health plan that self-insures the health risks of its plan 
participants to reimburse the plan or sponsor for losses that the plan 
or sponsor incurs in providing health or medical benefits to such plan 
participants in excess of a predetermined level set forth in the stop-
loss policy obtained by such plan or sponsor.''.
  (b) PHSA.--Section 2791(b)(1) of the Public Health Service Act (42 
U.S.C. 300gg-91(b)(1)) is amended by adding at the end the following 
new sentence: ``Such term shall not include a stop-loss policy obtained 
by a self-insured health plan or a plan sponsor of a group health plan 
that self-insures the health risks of its plan participants to 
reimburse the plan or sponsor for losses that the plan or sponsor 
incurs in providing health or medical benefits to such plan 
participants in excess of a predetermined level set forth in the stop-
loss policy obtained by such plan or sponsor.''.
  (c) IRC.--Section 9832(b)(1)(A) of the Internal Revenue Code of 1986 
is amended by adding at the end the following new sentence: ``Such term 
shall not include a stop-loss policy obtained by a self-insured health 
plan or a plan sponsor of a group health plan that self-insures the 
health risks of its plan participants to reimburse the plan or sponsor 
for losses that the plan or sponsor incurs in providing health or 
medical benefits to such plan participants in excess of a predetermined 
level set forth in the stop-loss policy obtained by such plan or 
sponsor.''.

                H.R. 1304, SELF-INSURANCE PROTECTION ACT


                                Purpose

    H.R. 1304, the Self-Insurance Protection Act, amends the 
Employee Retirement Income Security Act of 1974 (ERISA),\1\ the 
Public Health Services Act of 1968 (PHSA),\2\ and the Internal 
Revenue Code of 1986 (Code)\3\ to clarify that federal 
regulators cannot redefine stop-loss insurance as traditional 
health insurance. By providing legal certainty, the bill will 
help ensure workers and families continue to have access to 
affordable, flexible self-insured health plans.
---------------------------------------------------------------------------
    \1\29 U.S.C. Sec. 1001 et seq. [hereinafter ERISA].
    \2\42 U.S.C. Sec. 201 et seq. [hereinafter PHSA].
    \3\26 U.S.C. Sec. 1 et seq. [hereinafter the Code].
---------------------------------------------------------------------------

                            Committee Action


                             112TH CONGRESS

Full Committee hearing examining the Impact of the Health Care Law on 
        the Economy, Employers, and the Workforce

    On February 9, 2011, the Committee on Education and the 
Workforce (Committee) held a hearing entitled ``The Impact of 
the Health Care Law on the Economy, Employers, and the 
Workforce'' to discuss, among other things, the benefits of 
self-insuring. The witnesses before the Committee were Dr. Paul 
Howard, Senior Fellow, Manhattan Institute, New York, New York; 
Ms. Gail Johnson, President and CEO, Rainbow Station, Inc., 
Glenn Allen, Virginia; Dr. Paul Van de Water, Senior Fellow, 
Center on Budget and Policy Priorities, Washington, D.C.; and 
Mr. Neil Trautwein, Vice President and Employee Benefits Policy 
Counsel, National Retail Federation, Washington, D.C.

Subcommittee hearing examining the Pressures of Rising Costs on 
        Employer Provided Health Care

    On March 10, 2011, the Health, Employment, Labor and 
Pensions (HELP) Subcommittee held a hearing entitled ``The 
Pressures of Rising Costs on Employer Provided Health Care'' to 
discuss, among other things, the benefits of self-insurance. 
The witnesses were Mr. Tom Miller, Resident Fellow, American 
Enterprise Institute, Washington, D.C.; Mr. Brett Parker, Vice 
Chairman and Chief Financial Officer, Bowlmor Lanes, New York, 
New York; Mr. Jim Houser, Owner, Hawthorne Auto, Portland, 
Oregon; and Mr. J. Michael Brewer, President, Lockton Benefit 
Group, Lockton Companies, LLC, Kansas City, Missouri.

Subcommittee hearing examining the Recent Health Care Law: Consequences 
        for Indiana Families and Workers

    On June 7, 2011, the HELP Subcommittee held a field hearing 
in Evansville, Indiana, entitled ``The Recent Health Care Law: 
Consequences for Indiana Families and Workers'' to examine, 
among other things, the impact of the law on self-funded plans. 
The witnesses were the Honorable Mark Messmer, Indiana House of 
Representatives, Messmer Mechanical, Jasper, Indiana; Ms. Robyn 
Crosson, Company Compliance Services, State of Indiana 
Department of Insurance, Indianapolis, Indiana; Ms. Sherry 
Lang, Human Resources Director, Womack Restaurants, Terre 
Haute, Indiana; Mr. Denis Johnson, VP of Operations, Boston 
Scientific, Spencer, Indiana; Mr. David J. Carlson, M.D., 
General Surgeon, Deaconess Hospital, Evansville, Indiana; and 
Mr. Glen Graber, President, Graber Post Building, Inc., Odon, 
Indiana.

Subcommittee hearing examining Regulations, Costs, and Uncertainty in 
        Employer Provided Health Care

    On October 13, 2011, the HELP Subcommittee held a hearing 
entitled ``Regulations, Costs, and Uncertainty in Employer 
Provided Health Care,'' which examined, among other things, the 
characteristics and attributes of self-funded plans. The 
witnesses were Ms. Grace-Marie Turner, President, Galen 
Institute, Alexandria, Virginia; Mr. Dennis M. Donahue, 
Managing Director, Wells Fargo Insurance Services USA, Inc., 
Chicago, Illinois; Mr. Ron Pollack, Executive Director, 
Families USA, Washington, D.C.; and Ms. Robyn Piper, President, 
Piper Jordan, San Diego, California.

Subcommittee hearing examining Health Care: Challenges Facing 
        Pennsylvania's Workers and Job Creators

    On February 22, 2012, the HELP Subcommittee held a field 
hearing in Butler, Pennsylvania, entitled ``Health Care: 
Challenges Facing Pennsylvania's Workers and Job Creators'' to 
discuss, among other things, the benefits of self-insuring. The 
witnesses were the Honorable Donald C. White, Senator, 
Pennsylvania State Senate, Harrisburg, Pennsylvania; Ms. 
Kathleen Bishop, President and CEO, Meadville-Western Crawford, 
County Chamber of Commerce, Meadville, Pennsylvania; Ms. 
Georgeanne Koehler, Pittsburg, Pennsylvania; Ms. Lori Joint, 
Director of Government Affairs, Manufacturer & Business 
Association, Erie, Pennsylvania; Ms. Patti-Ann Kanterman, Chief 
Financial Officer, Associated Ceramics & Technology, Inc., 
Sarver, Pennsylvania; Mr. Paul T. Nelson, Owner and CEO, 
Waldameer Park, Inc., Erie, Pennsylvania; Mr. Ralph Vitt, 
Owner, Vitt Insure, Pittsburg, Pennsylvania; and Mr. Will 
Knecht, President, Wendell August Forge; Grove City, 
Pennsylvania.

Subcommittee hearing examining Barriers to Lower Health Care Costs for 
        Workers and Employers

    On May 31, 2012, the HELP Subcommittee held a hearing 
entitled ``Barriers to Lower Health Care Costs for Workers and 
Employers'' to examine rising health care costs facing 
employers and employees, including the destructive impact of 
the Affordable Care Act (ACA or Obamacare).\4\ The witnesses 
were Mr. Ed Fensholt, Senior Vice President, Lockton Companies, 
LLC, Kansas City, Missouri; Mr. Roy Ramthun, President, HAS 
Consulting Services, Washington, D.C.; Ms. Jody Hall, Founder & 
Owner, Cupcake Royale, Seattle, Washington; and Mr. Bill 
Streitberger, Vice President of Human Resources, Red Robin, 
Greenwood Village, Colorado.
---------------------------------------------------------------------------
    \4\Patient Protection and Affordable Care Act, Pub. L. No. 111-148 
(2010), and Health and Education Reconciliation Act, Pub. L. No. 111-
152 (2010) [hereinafter Affordable Care Act, Obamacare, or ACA].
---------------------------------------------------------------------------

                             113TH CONGRESS

Subcommittee hearing examining Health Care Challenges Facing North 
        Carolina's Workers and Job Creators

    On April 30, 2013, the HELP Subcommittee held a field 
hearing in Concord, North Carolina, entitled ``Health Care 
Challenges Facing North Carolina's Workers and Job Creators,'' 
during which witnesses discussed the negative impact of the 
ACA, including on businesses that self-insure. The witnesses 
were Mr. Chuck Horne, President, Hornwood Inc., Lilesville, 
North Carolina; Ms. Tina Haynes, Chief Human Resource Officer, 
Rowan-Cabarrus Community College, Salisbury, North Carolina; 
Mr. Adam Searing, Director, Health Access Coalition, Raleigh, 
North Carolina; Mr. Ken Conrad, Chairman, Libby Hill Seafood 
Restaurants, Greenboro, North Carolina; Mr. Dave Bass, Vice 
President, Compensation and Associate Wellness, Delhaize 
America, Concord, North Carolina; Mr. Ed Tubel, Founder and 
CEO, Tricor Inc., Charlotte, North Carolina; Dr. Olson Huff, 
Pediatrician, Asheville, North Carolina; and Mr. Bruce Silver, 
President and CEO, Racing Electronics, Concord, North Carolina.

Full Committee hearing reviewing the President's Fiscal Year 2014 
        Budget Proposal for the U.S. Department of Health and Human 
        Services

    On June 4, 2013, the Committee held a hearing entitled 
``Reviewing the President's Fiscal Year 2014 Budget Proposal 
for the U.S. Department of Health and Human Services,'' during 
which members discussed the experiences of employers that self-
insure. The sole witness at the hearing was The Honorable 
Kathleen Sebelius, then-Secretary of the U.S. Department of 
Health and Human Services, Washington, D.C.

Subcommittee hearing regarding the Employer Mandate: Examining the 
        Delay and Its Effect on Workplaces

    On July 23, 2013, the HELP Subcommittee and the Workforce 
Protections Subcommittee jointly held a hearing entitled ``The 
Employer Mandate: Examining the Delay and Its Effect on 
Workplaces'' to review, among other things, the impact of the 
ACA on the self-insured market. Witnesses before the 
subcommittees were Ms. Grace-Marie Turner, President, Galen 
Institute, Alexandria, Virginia; Mr. Jamie T. Richardson, Vice 
President, White Castle System, Inc., Columbus, Ohio; Mr. Ron 
Pollack, Executive Director, Families USA, Washington, D.C.; 
and Dr. Douglas Holtz-Eakin, President, American Action Forum, 
Washington, D.C.

Subcommittee hearing regarding Health Care Challenges Facing Kentucky's 
        Workers and Job Creators

    On August 27, 2013, the HELP Subcommittee held a field 
hearing in Lexington, Kentucky entitled ``Health Care 
Challenges Facing Kentucky's Workers and Job Creators,'' which 
included an examination of the harmful impact of the ACA on 
Kentucky's employers and their employees and a discussion about 
self-insurance. Witnesses before the subcommittee were Mr. Tim 
Kanaly, Owner and President, Gary Force Honda, Bowling Green, 
Kentucky; Mr. Joe Bologna, Owner, Joe Bologna's--Italian 
Pizzeria & Restaurant, Lexington, Kentucky; Ms. Carrie Banahan, 
Executive Director, Office of the Kentucky Health Benefit 
Exchange, Frankfort, Kentucky; Mr. John Humkey, President, 
Employee Benefit Associates, Inc., Lexington, Kentucky; Ms. 
Janey Moores, President and CEO, BJM & Associates, Inc., 
Lexington, Kentucky; Mr. Donnie Meadows, Vice President of 
Human Resources, K-VA-T Food Stores, Inc., Abingdon, VA; Ms. 
Debbie Basham, Southwest Breast Cancer Awareness Group, 
Louisville, Kentucky; and Mr. John McPhearson, CEO, 
Lectrodryer, Richmond, Kentucky.

Subcommittee hearing on Providing Access to Affordable, Flexible Health 
        Plans through Self-Insurance

    On February 26, 2014, the HELP Subcommittee held a hearing 
entitled ``Providing Access to Affordable, Flexible Health 
Plans through Self-Insurance'' to examine self-insurance and 
stop-loss insurance. The witnesses were Mr. Michael Ferguson, 
President and CEO, Self-Insurance Institute of America, 
Simpsonville, South Carolina; Mr. Wes Kelley, Executive 
Director, Columbia Power and Water Systems, Columbia, 
Tennessee; Ms. Maura Calsyn, Director of Health Policy, Center 
for American Progress, Washington, D.C.; and Mr. Robert 
Melillo, National Vice President of Risk Financing Solutions, 
USI Insurance, Glastonbury, Connecticut.

Full Committee hearing reviewing the President's Fiscal Year 2015 
        Budget Proposal for the Department of Labor

    On March 26, 2014, the Committee held a hearing entitled 
``Reviewing the President's Fiscal Year 2015 Budget Proposal 
for the Department of Labor,'' during which the Secretary of 
Labor was questioned about whether the Department had plans to 
regulate stop-loss. The sole witness was the Honorable Thomas 
E. Perez, then-Secretary of the U.S. Department of Labor, 
Washington, D.C.

Subcommittee hearing examining the Effects of the President's Health 
        Care Law on Indiana's Classrooms and Workplaces

    On September 4, 2014, the HELP Subcommittee held a field 
hearing in Greenfield, Indiana, entitled ``The Effects of the 
President's Health Care Law on Indiana's Classrooms and 
Workplaces,'' during which witnesses testified about employer-
provided health coverage and self-insured plans. The witnesses 
were Mr. Mike Shafer, Chief Financial Officer, Zionsville 
Community Schools, Zionsville, Indiana; Mr. Tom Snyder, 
President, Ivy Tech Community College, Indianapolis, Indiana; 
Mr. Danny Tanoos, Superintendent, Vigo County School 
Corporation, Terre Haute, Indiana; Mr. Tom Forkner, President, 
Anderson Federation of Teachers, AFT Local 519, Anderson, 
Indiana; Mr. Mark DeFabis, President and Chief Executive 
Officer, Integrated Distribution Services, Plainfield, Indiana; 
Mr. Nate LaMar, International Regional Manager, Draper, Inc., 
Spiceland, Indiana; Mr. Dan Wolfe, Owner, Wolfe's Auto Auction, 
Terre Haute, Indiana; and Mr. Robert Stone, Director of 
Palliative Care, IU Health Bloomington Hospital, Bloomington, 
Indiana.

                             114TH CONGRESS

H.R. 1423, Self-Insurance Protection Act, introduced

    On March 18, 2015, Rep. David ``Phil'' Roe (R-TN), then-
Chairman of the HELP Subcommittee, introduced the Self-
Insurance Protection Act (H.R. 1423).\5\ He introduced the bill 
to ensure employees and employers could continue to have access 
to affordable, flexible health care plans by having the option 
to self-fund those plans.
---------------------------------------------------------------------------
    \5\H.R. 1423, 114th Cong. (2015).
---------------------------------------------------------------------------

Full Committee hearing reviewing the President's Fiscal Year 2016 
        Budget Proposal for the Department of Labor

    On March 18, 2015, the Committee held a hearing entitled 
``Reviewing the President's Fiscal Year 2016 Budget Proposal 
for the Department of Labor,'' during which the Secretary of 
Labor was questioned about the Department's plans to regulate 
stop-loss. The sole witness was the Honorable Thomas E. Perez, 
then-Secretary of the U.S. Department of Labor, Washington, 
D.C.

Subcommittee hearing on Five Years of Broken Promises: How the 
        President's Health Care Law is Affecting America's Workplaces

    On April 14, 2015, the HELP Subcommittee held a hearing 
entitled ``Five Years of Broken Promises: How the President's 
Health Care Law is Affecting America's Workplaces,'' which 
examined the continuing negative impact of the ACA on employer-
sponsored health coverage. Witnesses before the Subcommittee 
were former Deputy Secretary of the Department of Health and 
Human Services the Honorable Tevi Troy, Ph.D., President, 
American Health Policy Institute, Washington, D.C.; Mr. Rutland 
Paal, Jr., President, Rutland Beard Floral Group, Scotch 
Plains, New Jersey; Michael Brev, President, Brev Corp. t/a 
Hobby Works, WingTOTE Manufacturing, LLC, Laurel, Maryland; and 
Ms. Sally Roberts, Human Resources Director, Morris 
Communications Company, LLC, Augusta, Georgia.

Full Committee hearing on examining the Policies and Priorities of the 
        U.S. Department of Health and Human Services

    On March 15, 2016, the Committee held a hearing entitled 
``Examining the Policies and Priorities of the U.S. Department 
of Health and Human Services,'' during which self-insured plans 
were discussed. The sole witness at the hearing was the 
Honorable Sylvia Mathews Burwell, then-Secretary of the U.S. 
Department of Health and Human Services, Washington, D.C.

Subcommittee hearing on Innovations in Health Care: Exploring Free-
        Market Solutions for a Healthy Workforce

    On April 14, 2016, the HELP Subcommittee held a hearing 
entitled ``Innovations in Health Care: Exploring Free-Market 
Solutions for a Healthy Workforce,'' which examined, among 
other things, the benefits of self-insuring. Witnesses before 
the subcommittee were Ms. Sabrina Corlette, J.D., Senior 
Research Professor, Center on Health Insurance Reforms, 
Georgetown University's Health Policy Institute, Washington, 
D.C.; Ms. Tresia Franklin, Director, Total Rewards and Employee 
Relations, Hallmark Cards, Inc. Kansas City, Missouri; Ms. Amy 
McDonough, Vice President and General Manager of Corporate 
Wellness, Fitbit, San Francisco, California; and Mr. John Zern, 
Executive Vice President and Global Health Leader, Aon, 
Chicago, Illinois.

                             115TH CONGRESS

Full Committee hearing on Rescuing Americans from the Failed Health 
        Care Law and Advancing Patient-Centered Solutions

    On February 1, 2017, the Committee held a hearing entitled 
``Rescuing Americans from the Failed Health Care Law and 
Advancing Patient-Centered Solutions,'' which examined failures 
of the ACA. Witnesses before the Committee included Mr. Scott 
Bollenbacher, CPA, Managing Partner, Bollenbacher & Associates, 
LLC, Portland, Indiana; Mr. Joe Eddy, President and Chief 
Executive Officer, Eagle Manufacturing Company, Wellsburg, West 
Virginia; Ms. Angela Schlaack, St. Joseph, Michigan; and Dr. 
Tevi Troy, Chief Executive Officer, American Health Policy 
Institute, Washington, D.C.

Full Committee hearing on Legislative Proposals to Improve Health Care 
        Coverage and Provide Lower Costs for Families

    On March 1, 2017, the Committee held a hearing entitled 
``Legislative Proposals to Improve Health Care Coverage and 
Provide Lower Costs for Families,'' which examined H.R. 1304, 
among other proposals. Witnesses before the Committee included 
Mr. Jon B. Hurst, President, Retailers Association of 
Massachusetts, Boston, Massachusetts; Ms. Allison R. Klausner, 
J.D., Principal, Government Relations Leader, Conduent, 
Secaucus, New Jersey; Ms. Lydia Mitts, Associate Director of 
Affordability Initiatives, Families USA, Washington, D.C.; and 
Mr. Jay Ritchie, Executive Vice President, Tokio Marine HHC, 
Kennesaw, Georgia.

Introduction of H.R. 1304, Self-Insurance Protection Act

    On March 2, 2017, Rep. Roe introduced the Self-Insurance 
Protection Act (H.R. 1304), along with HELP Subcommittee 
Chairman Tim Walberg (R-MI).\6\ Rep. Roe reintroduced the bill 
to ensure self-funding remains an option for employee and 
employers offering health care coverage.
---------------------------------------------------------------------------
    \6\H.R. 1304, 115th Cong. (2017).
---------------------------------------------------------------------------

Full Committee passes H.R. 1304, Self-Insurance Protection Act

    On March 8, 2017, the Committee considered H.R. 1304, the 
Self-Insurance Protection Act.\7\ Rep. Roe offered an amendment 
in the nature of a substitute, making a technical change to the 
introduced bill. The Committee voted to adopt the amendment in 
the nature of a substitute by voice vote. Rep. Jared Polis (D-
CO) offered an amendment that was ruled non-germane, and the 
ruling of the Chair was upheld by a vote of 22 to 17 on a 
motion to table the appeal of the ruling of the Chair. Rep. 
Bonamici (D-OR) offered a clarifying amendment to ensure that 
the legislation would not be construed to restrict the ability 
of states to regulate stop-loss policies. H.R. 1304 does not 
preempt states from regulating stop-loss coverage. At the 
request of Ranking Member Robert C. ``Bobby'' Scott (D-VA), 
Committee Chairwoman Virginia Foxx (R-NC) agreed to include 
such clarifying language in the Committee report. This 
clarification ensures that nothing in the bill is erroneously 
construed to restrict states' ability to regulate stop-loss 
policies. Based on the understanding between Chairwoman Foxx 
and Ranking Member Scott that this clarification would be 
included in the Committee's official report, Rep. Bonamici 
withdrew her amendment. The Committee favorably reported H.R. 
1304, as amended, to the House of Representatives by voice 
vote.
---------------------------------------------------------------------------
    \7\H.R. 1304, Self-Insurance Protection Act: Markup Before the H. 
Comm. on Educ. and the Workforce, 115th Cong. (2017).
---------------------------------------------------------------------------

                          Summary of H.R. 1304

    On March 2, 2017, Rep. Roe introduced H.R. 1304, which 
would amend ERISA, PHSA, and the Code to clarify that federal 
regulators cannot redefine stop-loss insurance as ``health 
insurance coverage'' under federal law, thereby ensuring 
employers can continue to utilize this important financial 
risk-management tool when offering employees health care 
coverage through a self-funded plan.

                            Committee Views


Background on employer-sponsored insurance coverage

    Since World War II, employers have offered health care 
benefits as a way to recruit and retain talent and ensure a 
healthy and productive workforce. Employer-sponsored insurance 
is one of the primary means by which Americans obtain health 
care coverage. According to the Kaiser Family Foundation, more 
than 150 million Americans, or 55.5 percent of working 
Americans, are covered by a health benefit plan offered by 
their employer.\8\ A report by the American Health Policy 
Institute found that employers spent $578.6 billion in 2012 
providing health coverage for 168.6 million employees, 
retirees, and dependents.\9\ Almost all businesses with at 
least 200 or more employees offer health benefits, and just 
over half of smaller businesses with 3-199 employees offer 
health benefits.\10\
---------------------------------------------------------------------------
    \8\Kaiser Family Found., Employer Health Benefits Survey (2016), 
http://files.kff.org/attachment/Report-Employer-Health-Benefits-2016-
Annual-Survey.
    \9\Troy, T., and Wilson, D.M., Health Coverage Cost Per Covered 
Life: Government vs. Employment-Sponsored Programs, American Health 
Policy Inst. (2014), http://www.americanhealthpolicy.org/Content/
documents/resources/AHPI_STUDY_Cost_Per_Covered_Life.pdf.
    \10\Kaiser Family Found., supra note 7.
---------------------------------------------------------------------------
    Employer-provided health benefits are regulated by a number 
of laws, including ERISA as amended by the ACA. The Department 
of Labor (DOL) implements and enforces ERISA. By virtue of its 
jurisdiction over ERISA, the Committee has jurisdiction over 
employer-provided health coverage.

Self-insured health plans

    Small and large employers offer health care coverage to 
employees in self-funded arrangements (self-insurance) or 
purchase fully-insured plans. ERISA regulates both fully-
insured and self-insured plans, but only self-insured plans are 
exempt from a patchwork of benefit mandates and regulations 
imposed under state insurance law. Employers sponsoring self-
insured plans are not subject to the same requirements under 
the ACA as those with fully-insured plans. Some employers that 
self-insure purchase ``stop-loss'' insurance as a financial 
risk management tool to protect against catastrophic claims. 
Therefore, employer-provided plans have different requirements 
and costs depending on funding arrangements. Last year, 
approximately 61 percent of workers with coverage were enrolled 
in a self-funded plan, up from 49 percent in 2000 and 54 
percent in 2005.\11\ Fifty-seven percent of workers enrolled in 
self-funded plans are in plans backed by stop-loss insurance 
coverage.\12\
---------------------------------------------------------------------------
    \11\Id.
    \12\Id. 
---------------------------------------------------------------------------
    An employer can provide health insurance to employees 
either by fully-insuring or self-insuring. An employer who is 
fully-insured enters into a contractual agreement with a health 
insurer to purchase a product for his or her employees. The 
employer and employees pay a fixed, monthly premium to the 
insurance company. This is what many consider ``traditional'' 
insurance. An employer who self-funds provides for employees' 
medical costs by paying providers directly or reimbursing 
employees as claims arise, instead of paying a fixed premium to 
an insurance company. Typically, a trust is set up to fund such 
claims. Self-insured employers are responsible for employees' 
health care expenses, and they have the flexibility to 
customize the design of their health plans to meet the specific 
needs of their workforce.
    A self-insured employer can either administer the employee 
claims in-house or subcontract the administrative services to a 
third party administrator (TPA). The employer or TPA then 
coordinates provider network contracts and stop-loss insurance 
coverage for unexpected high claims.\13\ By making a conscious 
choice to bear the financial risk of an employee's health care 
expenses, employers can experience cost savings that are not 
available from a plan purchased in the fully-insured market. 
Mr. Jay Ritchie, Executive Vice President, Tokio Marino HCC 
Stop-Loss Group, testifying before the Committee on behalf of 
the Self-Insurance Institute of America, Inc., discussed the 
value of self-funding:
---------------------------------------------------------------------------
    \13\Self-Insured Inst. of America, http://www.siia.org/i4a/pages/
Index.cfm?pageID=4546 (last visited Mar. 15, 2017).

          If you're a health insurer, you're going to take the 
        increasing cost of medical insurance and, due to our 
        new medical loss ratio law, get a profit percentage on 
        the rising increase of that cost. So, you take it into 
        a self-insured model[,] and you're not paying the 
        health insurer's profits on top of your rising costs. 
        That's the value of self-insurance. You're taking it 
        and controlling your own destination, and keeping it at 
        a true costs basis.\14\
---------------------------------------------------------------------------
    \14\Legislative Proposals to Improve Health Care Coverage and 
Provide Lower Costs for Families: Hearing Before the H. Comm. on Educ. 
and the Workforce, 115th Cong. (2017) (statement of Jay Ritchie, 
Executive Vice President, Tokio Marine HHC).

    The more employees an employer has, the more likely that 
employer is to self-insure. Of employers who self-insure, 82 
percent are businesses with 200 or more employees.\15\ Small 
businesses are less likely to self-insure because, unlike their 
larger counterparts, they often have fewer employees to spread 
the risk and smaller margins to pay claims. In 2016, 13 percent 
of firms with fewer than 200 employees self-insured.\16\ The 
top industries with self-insured firms include transportation, 
manufacturing, retail, finance, state and local government, and 
health care.\17\
---------------------------------------------------------------------------
    \15\Kaiser Family Found., supra note 7 (finding 83 percent of 
covered workers in firms with 1,000 to 4,999 workers and 94 percent of 
covered workers in firms with 5,000 or more workers are in self-funded 
plans. In 2006, 78 percent of large firms with 200 or more workers were 
self-insured).
    \16\Id.
    \17\Id.
---------------------------------------------------------------------------
    Many employers choose to self-insure because they can 
customize their plans to their workforce. For example, self-
insured plans are not required to cover all categories of 
essential health benefits mandated by the ACA, so employers can 
structure their plans to meet the specific needs of their 
employees instead of paying for a more costly ``one-size-fits-
all'' traditional insurance policy. Mr. Michael Ferguson, 
President and CEO, Self-Insurance Institute of America, Inc. 
testified before the subcommittee about the benefits of self-
funded plans:

          Federal law provides self-insured plans greater 
        flexibility in designing benefits packages that better 
        meet the specific needs of their plan participants. . . 
        . Self-insurance plans can also structure more 
        innovative reimbursement arrangements with health care 
        providers. . . . As medical costs have skyrocketed, 
        self-insured plan sponsors have been taking steps to 
        reduce medical costs by emphasizing prevention and 
        maintenance care for chronic diseases.\18\
---------------------------------------------------------------------------
    \18\Providing Access to Affordable, Flexible Health Plans Through 
Self-Insurance: Hearing Before the Subcomm. on Health, Emp't, Labor, 
and Pensions of the H. Comm. on Educ. and the Workforce, 113th Cong., 
46 (2014) (statement of Michael Ferguson, President and CEO, Self-
Insurance Inst. of America, Inc.).

    Self-insurance is also attractive to employers due to the 
long-term financial savings it may provide. Mr. Ritchie 
acknowledged these savings in his testimony before the 
---------------------------------------------------------------------------
Committee, saying:

        . . . over a 3- to 5-year period, we see that self-
        insurance is generally cheaper than health insurance. 
        Now, on a year-to-year basis, that may be very 
        different because the health insurance is prospectively 
        priced where the self-insurance is actually priced. 
        Whatever you actually spend that year is your cost, 
        where for health insurance they're predicting that.\19\
---------------------------------------------------------------------------
    \19\Ritchie, supra note 13.

Under a self-insured plan, the dollars that are not spent on 
claims costs can be saved in the plan's reserves to help cover 
the future health care needs of workers and their families.

Stop-loss insurance

    Many self-insured employers also purchase stop-loss 
insurance, a financial risk-management tool designed to protect 
against catastrophic claims expenses. Stop-loss coverage 
reimburses a self-insured plan sponsor for medical claims that 
exceed a certain pre-established level of liability; it does 
not insure employees, nor does it reimburse medical providers 
for care. As Mr. Ritchie stated in his testimony, ``stop-loss 
does not insure employees nor do we reimburse medical providers 
for care, but rather stop-loss reimburses a self-insured entity 
for health care payments they have made that exceed certain, 
pre-determined level similar to a liability product.''\20\
---------------------------------------------------------------------------
    \20\Id.
---------------------------------------------------------------------------
    The point at which the stop-loss carrier begins to pay 
claims is known as the ``attachment point.'' There are two 
types of stop-loss insurance: ``specific'' and ``aggregate.'' 
Specific stop-loss insurance protects against a high claim of a 
single employee, while aggregate stop-loss insurance institutes 
a maximum dollar amount of claims paid during a certain period 
of time. Most employers who purchase stop-loss insurance 
purchase both specific and aggregate stop-loss coverage. In 
2016, the average attachment point was $160,000 for small 
businesses and $330,000 for large businesses that carry 
specific stop-loss coverage.
    Traditionally, stop-loss plans are purchased by small- and 
medium-sized employers who want to offer employees the 
flexibility of a self-insured health plan while being safe-
guarded against unusually high claims. In testimony before the 
Committee, Mr. Ritchie described how small businesses benefit 
from stop-loss insurance:

          What we see is once you get about 5,000 lives, claims 
        become pretty predictable and, therefore, there is no 
        reason to purchase stop-loss insurance anymore. You 
        don't need that risk transfer mechanism. Who does need 
        that risk transfer mechanism are those as you get 
        smaller, so the smaller an employer gets, the more risk 
        transfer they need to support their self-funded 
        plan.\21\
---------------------------------------------------------------------------
    \21\Id.

In 2016, 72 percent of covered workers in a small firm's (3-199 
workers) partially or fully self-funded plan were also covered 
by stop-loss insurance, compared to 56 percent of workers 
covered in a large firm's (200 or more workers) partially or 
fully self-funded plan. The larger the employer, the more 
liability they are able to bear on their own without the need 
for stop-loss coverage.
    Stop-loss insurance is sometimes regulated at the state 
level but not the federal level. However, the Obama 
administration repeatedly signaled interest in regulating stop-
loss insurance as health insurance. Mr. Ferguson testified that 
the industry understood this possible intent:

        . . . the [Obama] administration has at least an 
        interest . . . in making it more difficult for 
        employers to obtain stop-loss insurance as a way to 
        sort of control a migration towards self-insurance. So, 
        to the extent that [obtaining] stop-loss insurance is 
        made more difficult through a regulatory process, it 
        will dissuade more employers from being able--or make 
        it difficult for those employers to operate self-
        insured plans.\22\
---------------------------------------------------------------------------
    \22\Ferguson, supra note 17.

In November 2014, DOL made clear that a state law would not be 
preempted by ERISA, thus formally notifying states of their 
ability to regulate employer stop-loss coverage. Stakeholders 
feared this guidance was a precursor to federal regulation that 
would have a negative effect on employers' ability to self-
insure. Mr. Jay Ritchie, Executive Vice President, Tokio Marine 
HCC Stop-Loss Group, testified during the Committee's hearing 
about the consequence of regulating stop-loss coverage at the 
---------------------------------------------------------------------------
federal level:

          If stop loss is defined as health insurance coverage, 
        it will dramatically change the nature of stop loss 
        coverage, potentially leading to few or no carriers in 
        the market, which will drive up the cost and threaten 
        the existence of self-insured plans. By limiting the 
        availability of stop loss, employer sponsored would be 
        forced to move back to a more expensive fully-insured 
        model, passing those costs on to employees and 
        restricting their ability to offer more customized 
        benefits and access to data.\23\
---------------------------------------------------------------------------
    \23\Ritchie, supra note 13.

Stop-loss coverage is not and should not be defined as health 
insurance coverage under ERISA, the PHSA, or the Code. Stop-
loss differs from health insurance in that it is priced to 
cover only one to three claims a year,\24\ and it does not 
insure employees or reimburse medical providers for care.
---------------------------------------------------------------------------
    \24\Id.
---------------------------------------------------------------------------

Support for maintaining self-funding as an option for all businesses

    The Self-Insurance Institute of America, Inc. and the U.S. 
Chamber of Commerce support this legislation because it 
protects a funding mechanism option businesses should be 
permitted to consider when offering a self-insured health plan 
to their employees. Moreover, the legislation ensures that 
thousands of employers--large and small--who currently self-
insure their health plans will be able to continue providing 
affordable benefits that best meet the needs of their workers 
and their families.

                               Conclusion

    Plan sponsors that choose to self-fund are able to offer 
their employees tailored benefits based on their specific 
needs. Self-funding also allows for cost reductions because the 
employer pays claims when they actually are incurred, and it 
eliminates paying for marketing and profits of the insurer 
under a fully-insured plan. When offering health care coverage, 
plan sponsors should be permitted to consider if self-funding 
is appropriate for them. Stop-loss policies are essential to 
ensuring self-funding is still an option by giving plan 
sponsors a tool to manage the financial risk and ensure 
employees claims are paid. H.R. 1304 amends ERISA, the PHSA, 
and the Code to clarify that federal regulators cannot redefine 
stop-loss insurance as ``health insurance coverage,'' therefore 
preserving the option of self-funding. Stop-loss coverage 
should not be regulated at the federal level, and the bill 
leaves regulation of these policies to the states. H.R. 1304 is 
one part of a broader effort to ensure all Americans have 
access to affordable health care coverage that meets their 
needs.

                           Section-by-Section

    The following is a section-by-section analysis of the 
Amendment in the Nature of a Substitute offered by Rep. Roe and 
reported favorably by the Committee.

Section 1. Short title

    Section 1 provides the short title is the ``Self-Insurance 
Protection Act.''

Section 2. Certain medical stop-loss insurance obtained by certain plan 
        sponsors of group health plans not included under the 
        definition of health insurance coverage

    Subsection (a) amends the definition of health insurance 
coverage under ERISA to explicitly state that a stop-loss 
policy is not health insurance coverage.
    Subsection (b) amends the definition of health insurance 
coverage under PHSA to explicitly state that a stop-loss policy 
is not health insurance coverage.
    Subsection (c) amends the definition of health insurance 
coverage under the Code to explicitly state that a stop-loss 
policy is not health insurance coverage.

                       Explanation of Amendments

    The amendments, including the amendment in the nature of a 
substitute, are explained in the body of this report.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch. H.R. 1304 will help ensure workers and families 
continue to have access to affordable, flexible self-insured 
health plans.

                       Unfunded Mandate Statement

    With respect to the requirements of Section 423 of the 
Congressional Budget and Impoundment Control Act (as amended by 
Section 101(a)(2) of the Unfunded Mandates Reform Act, P.L. 
104-4), the Committee has requested but not received from the 
Director of the Congressional Budget Office a statement as to 
whether the provisions of the reported bill include unfunded 
mandates.

                           Earmark Statement

    H.R. 1304 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of House Rule XXI.

                            Roll Call Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee Report to include for 
each record vote on a motion to report the measure or matter 
and on any amendments offered to the measure or matter the 
total number of votes for and against and the names of the 
Members voting for and against.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                             Correspondence

    Exchange of letters with the Committee on Energy and 
Commerce and the Committee on Ways and Means.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         Statement of General Performance Goals and Objectives

    In accordance with clause (3)(c) of House Rule XIII, the 
goal of H.R. 1304 is to help ensure workers and families 
continue to have access to affordable, flexible self-insured 
health plans.

                    Duplication of Federal Programs

    No provision of H.R. 1304 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The committee estimates that enacting H.R. 1304 does not 
specifically direct the completion of any specific rule makings 
within the meaning of 5 U.S.C. 551.

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the body of this report.

   New Budget Authority and CBO Cost Estimate Committee Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has requested 
but not received a cost estimate for this bill from the 
Director of Congressional Budget Office. The Committee has 
requested but not received from the Director of the 
Congressional Budget Office a statement as to whether this bill 
contains any new budget authority, spending authority, credit 
authority, or an increase or decrease in revenues or tax 
expenditures.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (new matter is 
printed in italic and existing law in which no change is 
proposed is shown in roman):

            EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974




           *       *       *       *       *       *       *
TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS

           *       *       *       *       *       *       *



Subtitle B--Regulatory Provisions

           *       *       *       *       *       *       *



Part 7--Group Health Plan Requirements

           *       *       *       *       *       *       *



Subpart C--General Provisions

           *       *       *       *       *       *       *



SEC. 733. DEFINITIONS.

  (a) Group Health Plan.--For purposes of this part--
          (1) In general.--The term ``group health plan'' means 
        an employee welfare benefit plan to the extent that the 
        plan provides medical care (as defined in paragraph (2) 
        and including items and services paid for as medical 
        care) to employees or their dependents (as defined 
        under the terms of the plan) directly or through 
        insurance, reimbursement, or otherwise. Such term shall 
        not include any qualified small employer health 
        reimbursement arrangement (as defined in section 
        9831(d)(2) of the Internal Revenue Code of 1986).
          (2) Medical care.--The term ``medical care'' means 
        amounts paid for--
                  (A) the diagnosis, cure, mitigation, 
                treatment, or prevention of disease, or amounts 
                paid for the purpose of affecting any structure 
                or function of the body,
                  (B) amounts paid for transportation primarily 
                for and essential to medical care referred to 
                in subparagraph (A), and
                  (C) amounts paid for insurance covering 
                medical care referred to in subparagraphs (A) 
                and (B).
  (b) Definitions Relating to Health Insurance.--For purposes 
of this part--
          (1) Health insurance coverage.--The term ``health 
        insurance coverage'' means benefits consisting of 
        medical care (provided directly, through insurance or 
        reimbursement, or otherwise and including items and 
        services paid for as medical care) under any hospital 
        or medical service policy or certificate, hospital or 
        medical service plan contract, or health maintenance 
        organization contract offered by a health insurance 
        issuer. Such term shall not include a stop-loss policy 
        obtained by a self-insured health plan or a plan 
        sponsor of a group health plan that self-insures the 
        health risks of its plan participants to reimburse the 
        plan or sponsor for losses that the plan or sponsor 
        incurs in providing health or medical benefits to such 
        plan participants in excess of a predetermined level 
        set forth in the stop-loss policy obtained by such plan 
        or sponsor.
          (2) Health insurance issuer.--The term ``health 
        insurance issuer'' means an insurance company, 
        insurance service, or insurance organization (including 
        a health maintenance organization, as defined in 
        paragraph (3)) which is licensed to engage in the 
        business of insurance in a State and which is subject 
        to State law which regulates insurance (within the 
        meaning of section 514(b)(2)). Such term does not 
        include a group health plan.
          (3) Health maintenance organization.--The term 
        ``health maintenance organization'' means--
                  (A) a federally qualified health maintenance 
                organization (as defined in section 1301(a) of 
                the Public Health Service Act (42 U.S.C. 
                300e(a))),
                  (B) an organization recognized under State 
                law as a health maintenance organization, or
                  (C) a similar organization regulated under 
                State law for solvency in the same manner and 
                to the same extent as such a health maintenance 
                organization.
          (4) Group health insurance coverage.--The term 
        ``group health insurance coverage'' means, in 
        connection with a group health plan, health insurance 
        coverage offered in connection with such plan.
  (c) Excepted Benefits.--For purposes of this part, the term 
``excepted benefits'' means benefits under one or more (or any 
combination thereof) of the following:
          (1) Benefits not subject to requirements.--
                  (A) Coverage only for accident, or disability 
                income insurance, or any combination thereof.
                  (B) Coverage issued as a supplement to 
                liability insurance.
                  (C) Liability insurance, including general 
                liability insurance and automobile liability 
                insurance.
                  (D) Workers' compensation or similar 
                insurance.
                  (E) Automobile medical payment insurance.
                  (F) Credit-only insurance.
                  (G) Coverage for on-site medical clinics.
                  (H) Other similar insurance coverage, 
                specified in regulations, under which benefits 
                for medical care are secondary or incidental to 
                other insurance benefits.
          (2) Benefits not subject to requirements if offered 
        separately.--
                  (A) Limited scope dental or vision benefits.
                  (B) Benefits for long-term care, nursing home 
                care, home health care, community-based care, 
                or any combination thereof.
                  (C) Such other similar, limited benefits as 
                are specified in regulations.
          (3) Benefits not subject to requirements if offered 
        as independent, noncoordinated benefits.--
                  (A) Coverage only for a specified disease or 
                illness.
                  (B) Hospital indemnity or other fixed 
                indemnity insurance.
          (4) Benefits not subject to requirements if offered 
        as separate insurance policy.--Medicare supplemental 
        health insurance (as defined under section 1882(g)(1) 
        of the Social Security Act), coverage supplemental to 
        the coverage provided under chapter 55 of title 10, 
        United States Code, and similar supplemental coverage 
        provided to coverage under a group health plan.
  (d) Other Definitions.--For purposes of this part--
          (1) COBRA continuation provision.--The term ``COBRA 
        continuation provision'' means any of the following:
                  (A) Part 6 of this subtitle.
                  (B) Section 4980B of the Internal Revenue 
                Code of 1986, other than subsection (f)(1) of 
                such section insofar as it relates to pediatric 
                vaccines.
                  (C) Title XXII of the Public Health Service 
                Act.
          (2) Health status-related factor.--The term ``health 
        status-related factor'' means any of the factors 
        described in section 702(a)(1).
          (3) Network plan.--The term ``network plan'' means 
        health insurance coverage offered by a health insurance 
        issuer under which the financing and delivery of 
        medical care (including items and services paid for as 
        medical care) are provided, in whole or in part, 
        through a defined set of providers under contract with 
        the issuer.
          (4) Placed for adoption.--The term ``placement'', or 
        being ``placed'', for adoption, has the meaning given 
        such term in section 609(c)(3)(B).
          (5) Family member.--The term ``family member'' means, 
        with respect to an individual--
                  (A) a dependent (as such term is used for 
                purposes of section 701(f)(2)) of such 
                individual, and
                  (B) any other individual who is a first-
                degree, second-degree, third-degree, or fourth-
                degree relative of such individual or of an 
                individual described in subparagraph (A).
          (6) Genetic information.--
                  (A) In general.--The term ``genetic 
                information'' means, with respect to any 
                individual, information about--
                          (i) such individual's genetic tests,
                          (ii) the genetic tests of family 
                        members of such individual, and
                          (iii) the manifestation of a disease 
                        or disorder in family members of such 
                        individual.
                  (B) Inclusion of genetic services and 
                participation in genetic research.--Such term 
                includes, with respect to any individual, any 
                request for, or receipt of, genetic services, 
                or participation in clinical research which 
                includes genetic services, by such individual 
                or any family member of such individual.
                  (C) Exclusions.--The term ``genetic 
                information'' shall not include information 
                about the sex or age of any individual.
          (7) Genetic test.--
                  (A) In general.--The term ``genetic test'' 
                means an analysis of human DNA, RNA, 
                chromosomes, proteins, or metabolites, that 
                detects genotypes, mutations, or chromosomal 
                changes.
                  (B) Exceptions.--The term ``genetic test'' 
                does not mean--
                          (i) an analysis of proteins or 
                        metabolites that does not detect 
                        genotypes, mutations, or chromosomal 
                        changes; or
                          (ii) an analysis of proteins or 
                        metabolites that is directly related to 
                        a manifested disease, disorder, or 
                        pathological condition that could 
                        reasonably be detected by a health care 
                        professional with appropriate training 
                        and expertise in the field of medicine 
                        involved.
          (8) Genetic services.--The term ``genetic services'' 
        means--
                  (A) a genetic test;
                  (B) genetic counseling (including obtaining, 
                interpreting, or assessing genetic 
                information); or
                  (C) genetic education.
          (9) Underwriting purposes.--The term ``underwriting 
        purposes'' means, with respect to any group health 
        plan, or health insurance coverage offered in 
        connection with a group health plan--
                  (A) rules for, or determination of, 
                eligibility (including enrollment and continued 
                eligibility) for benefits under the plan or 
                coverage;
                  (B) the computation of premium or 
                contribution amounts under the plan or 
                coverage;
                  (C) the application of any pre-existing 
                condition exclusion under the plan or coverage; 
                and
                  (D) other activities related to the creation, 
                renewal, or replacement of a contract of health 
                insurance or health benefits.

           *       *       *       *       *       *       *

                              ----------                              


                       PUBLIC HEALTH SERVICE ACT




           *       *       *       *       *       *       *
TITLE XXVII--REQUIREMENTS RELATING TO HEALTH INSURANCE COVERAGE

           *       *       *       *       *       *       *



             Part C--Definitions; Miscellaneous Provisions


SEC. 2791. DEFINITIONS.

  (a) Group Health Plan.--
          (1) Definition.--The term ``group health plan'' means 
        an employee welfare benefit plan (as defined in section 
        3(1) of the Employee Retirement Income Security Act of 
        1974) to the extent that the plan provides medical care 
        (as defined in paragraph (2)) and including items and 
        services paid for as medical care) to employees or 
        their dependents (as defined under the terms of the 
        plan) directly or through insurance, reimbursement, or 
        otherwise. Except for purposes of part C of title XI of 
        the Social Security Act (42 U.S.C. 1320d et seq.), such 
        term shall not include any qualified small employer 
        health reimbursement arrangement (as defined in section 
        9831(d)(2) of the Internal Revenue Code of 1986).
          (2) Medical care.--The term ``medical care'' means 
        amounts paid for--
                  (A) the diagnosis, cure, mitigation, 
                treatment, or prevention of disease, or amounts 
                paid for the purpose of affecting any structure 
                or function of the body,
                  (B) amounts paid for transportation primarily 
                for and essential to medical care referred to 
                in subparagraph (A), and
                  (C) amounts paid for insurance covering 
                medical care referred to in subparagraphs (A) 
                and (B).
          (3) Treatment of certain plans as group health plan 
        for notice provision.--A program under which creditable 
        coverage described in subparagraph (C), (D), (E), or 
        (F) of section 2701(c)(1) is provided shall be treated 
        as a group health plan for purposes of applying section 
        2701(e).
  (b) Definitions Relating to Health Insurance.--
          (1) Health insurance coverage.--The term ``health 
        insurance coverage'' means benefits consisting of 
        medical care (provided directly, through insurance or 
        reimbursement, or otherwise and including items and 
        services paid for as medical care) under any hospital 
        or medical service policy or certificate, hospital or 
        medical service plan contract, or health maintenance 
        organization contract offered by a health insurance 
        issuer. Such term shall not include a stop-loss policy 
        obtained by a self-insured health plan or a plan 
        sponsor of a group health plan that self-insures the 
        health risks of its plan participants to reimburse the 
        plan or sponsor for losses that the plan or sponsor 
        incurs in providing health or medical benefits to such 
        plan participants in excess of a predetermined level 
        set forth in the stop-loss policy obtained by such plan 
        or sponsor.
          (2) Health insurance issuer.--The term ``health 
        insurance issuer'' means an insurance company, 
        insurance service, or insurance organization (including 
        a health maintenance organization, as defined in 
        paragraph (3)) which is licensed to engage in the 
        business of insurance in a State and which is subject 
        to State law which regulates insurance (within the 
        meaning of section 514(b)(2) of the Employee Retirement 
        Income Security Act of 1974). Such term does not 
        include a group health plan.
          (3) Health maintenance organization.--The term 
        ``health maintenance organization'' means--
                  (A) a Federally qualified health maintenance 
                organization (as defined in section 1301(a)),
                  (B) an organization recognized under State 
                law as a health maintenance organization, or
                  (C) a similar organization regulated under 
                State law for solvency in the same manner and 
                to the same extent as such a health maintenance 
                organization.
          (4) Group health insurance coverage.--The term 
        ``group health insurance coverage'' means, in 
        connection with a group health plan, health insurance 
        coverage offered in connection with such plan.
          (5) Individual health insurance coverage.--The term 
        ``individual health insurance coverage'' means health 
        insurance coverage offered to individuals in the 
        individual market, but does not include short-term 
        limited duration insurance.
  (c) Excepted Benefits.--For purposes of this title, the term 
``excepted benefits'' means benefits under one or more (or any 
combination thereof) of the following:
          (1) Benefits not subject to requirements.--
                  (A) Coverage only for accident, or disability 
                income insurance, or any combination thereof.
                  (B) Coverage issued as a supplement to 
                liability 
                insurance.
                  (C) Liability insurance, including general 
                liability insurance and automobile liability 
                insurance.
                  (D) Workers' compensation or similar 
                insurance.
                  (E) Automobile medical payment insurance.
                  (F) Credit-only insurance.
                  (G) Coverage for on-site medical clinics.
                  (H) Other similar insurance coverage, 
                specified in regulations, under which benefits 
                for medical care are secondary or incidental to 
                other insurance benefits.
          (2) Benefits not subject to requirements if offered 
        separately.--
                  (A) Limited scope dental or vision benefits.
                  (B) Benefits for long-term care, nursing home 
                care, home health care, community-based care, 
                or any combination thereof.
                  (C) Such other similar, limited benefits as 
                are specified in regulations.
          (3) Benefits not subject to requirements if offered 
        as independent, noncoordinated benefits.--
                  (A) Coverage only for a specified disease or 
                illness.
                  (B) Hospital indemnity or other fixed 
                indemnity insurance.
          (4) Benefits not subject to requirements if offered 
        as separate insurance policy.--Medicare supplemental 
        health insurance (as defined under section 1882(g)(1) 
        of the Social Security Act), coverage supplemental to 
        the coverage provided under chapter 55 of title 10, 
        United States Code, and similar supplemental coverage 
        provided to coverage under a group health plan.
  (d) Other Definitions.--
          (1) Applicable state authority.--The term 
        ``applicable State authority'' means, with respect to a 
        health insurance issuer in a State, the State insurance 
        commissioner or official or officials designated by the 
        State to enforce the requirements of this title for the 
        State involved with respect to such issuer.
          (2) Beneficiary.--The term ``beneficiary'' has the 
        meaning given such term under section 3(8) of the 
        Employee Retirement Income Security Act of 1974.
          (3) Bona fide association.--The term ``bona fide 
        association'' means, with respect to health insurance 
        coverage offered in a State, an association which--
                  (A) has been actively in existence for at 
                least 5 years;
                  (B) has been formed and maintained in good 
                faith for purposes other than obtaining 
                insurance;
                  (C) does not condition membership in the 
                association on any health status-related factor 
                relating to an individual (including an 
                employee of an employer or a dependent of an 
                employee);
                  (D) makes health insurance coverage offered 
                through the association available to all 
                members regardless of any health status-related 
                factor relating to such members (or individuals 
                eligible for coverage through a member);
                  (E) does not make health insurance coverage 
                offered through the association available other 
                than in connection with a member of the 
                association; and
                  (F) meets such additional requirements as may 
                be imposed under State law.
          (4) COBRA continuation provision.--The term ``COBRA 
        continuation provision'' means any of the following:
                  (A) Section 4980B of the Internal Revenue 
                Code of 1986, other than subsection (f)(1) of 
                such section insofar as it relates to pediatric 
                vaccines.
                  (B) Part 6 of subtitle B of title I of the 
                Employee Retirement Income Security Act of 
                1974, other than section 609 of such Act.
                  (C) Title XXII of this Act.
          (5) Employee.--The term ``employee'' has the meaning 
        given such term under section 3(6) of the Employee 
        Retirement Income Security Act of 1974.
          (6) Employer.--The term ``employer'' has the meaning 
        given such term under section 3(5) of the Employee 
        Retirement Income Security Act of 1974, except that 
        such term shall include only employers of two or more 
        employees.
          (7) Church plan.--The term ``church plan'' has the 
        meaning given such term under section 3(33) of the 
        Employee Retirement Income Security Act of 1974.
          (8) Governmental plan.--(A) The term ``governmental 
        plan'' has the meaning given such term under section 
        3(32) of the Employee Retirement Income Security Act of 
        1974 and any Federal governmental plan.
          (B) Federal governmental plan.--The term ``Federal 
        governmental plan'' means a governmental plan 
        established or maintained for its employees by the 
        Government of the United States or by any agency or 
        instrumentality of such Government.
          (C) Non-Federal governmental plan.--The term ``non-
        Federal governmental plan'' means a governmental plan 
        that is not a Federal governmental plan.
          (9) Health status-related factor.--The term ``health 
        status-related factor'' means any of the factors 
        described in section 2702(a)(1).
          (10) Network plan.--The term ``network plan'' means 
        health insurance coverage of a health insurance issuer 
        under which the financing and delivery of medical care 
        (including items and services paid for as medical care) 
        are provided, in whole or in part, through a defined 
        set of providers under contract with the issuer.
          (11) Participant.--The term ``participant'' has the 
        meaning given such term under section 3(7) of the 
        Employee Retirement Income Security Act of 1974.
          (12) Placed for adoption defined.--The term 
        ``placement'', or being ``placed'', for adoption, in 
        connection with any placement for adoption of a child 
        with any person, means the assumption and retention by 
        such person of a legal obligation for total or partial 
        support of such child in anticipation of adoption of 
        such child. The child's placement with such person 
        terminates upon the termination of such legal 
        obligation.
          (13) Plan sponsor.--The term ``plan sponsor'' has the 
        meaning given such term under section 3(16)(B) of the 
        Employee Retirement Income Security Act of 1974.
          (14) State.--The term ``State'' means each of the 
        several States, the District of Columbia, Puerto Rico, 
        the Virgin Islands, Guam, American Samoa, and the 
        Northern Mariana Islands.
          (15) Family member.--The term ``family member'' 
        means, with respect to any individual--
                  (A) a dependent (as such term is used for 
                purposes of section 2701(f)(2)) of such 
                individual; and
                  (B) any other individual who is a first-
                degree, second-degree, third-degree, or fourth-
                degree relative of such individual or of an 
                individual described in subparagraph (A).
          (16) Genetic information.--
                  (A) In general.--The term ``genetic 
                information'' means, with respect to any 
                individual, information about--
                          (i) such individual's genetic tests,
                          (ii) the genetic tests of family 
                        members of such individual, and
                          (iii) the manifestation of a disease 
                        or disorder in family members of such 
                        individual.
                  (B) Inclusion of genetic services and 
                participation in genetic research.--Such term 
                includes, with respect to any individual, any 
                request for, or receipt of, genetic services, 
                or participation in clinical research which 
                includes genetic services, by such individual 
                or any family member of such individual.
                  (C) Exclusions.--The term ``genetic 
                information'' shall not include information 
                about the sex or age of any individual.
          (17) Genetic test.--
                  (A) In general.--The term ``genetic test'' 
                means an analysis of human DNA, RNA, 
                chromosomes, proteins, or metabolites, that 
                detects genotypes, mutations, or chromosomal 
                changes.
                  (B) Exceptions.--The term ``genetic test'' 
                does not mean--
                          (i) an analysis of proteins or 
                        metabolites that does not detect 
                        genotypes, mutations, or chromosomal 
                        changes; or
                          (ii) an analysis of proteins or 
                        metabolites that is directly related to 
                        a manifested disease, disorder, or 
                        pathological condition that could 
                        reasonably be detected by a health care 
                        professional with appropriate training 
                        and expertise in the field of medicine 
                        involved.
          (18) Genetic services.--The term ``genetic services'' 
        means--
                  (A) a genetic test;
                  (B) genetic counseling (including obtaining, 
                interpreting, or assessing genetic 
                information); or
                  (C) genetic education.
          (19) Underwriting purposes.--The term ``underwriting 
        purposes'' means, with respect to any group health 
        plan, or health insurance coverage offered in 
        connection with a group health plan--
                  (A) rules for, or determination of, 
                eligibility (including enrollment and continued 
                eligibility) for benefits under the plan or 
                coverage;
                  (B) the computation of premium or 
                contribution amounts under the plan or 
                coverage;
                  (C) the application of any pre-existing 
                condition exclusion under the plan or coverage; 
                and
                  (D) other activities related to the creation, 
                renewal, or replacement of a contract of health 
                insurance or health benefits.
          (20) Qualified health plan.--The term ``qualified 
        health plan'' has the meaning given such term in 
        section 1301(a) of the Patient Protection and 
        Affordable Care Act.
          (21) Exchange.--The term ``Exchange'' means an 
        American Health Benefit Exchange established under 
        section 1311 of the Patient Protection and Affordable 
        Care Act.
  (e) Definitions Relating to Markets and Small Employers.--For 
purposes of this title:
          (1) Individual market.--
                  (A) In general.--The term ``individual 
                market'' means the market for health insurance 
                coverage offered to individuals other than in 
                connection with a group health plan.
                  (B) Treatment of very small groups.--
                          (i) In general.--Subject to clause 
                        (ii), such terms includes coverage 
                        offered in connection with a group 
                        health plan that has fewer than two 
                        participants as current employees on 
                        the first day of the plan year.
                          (ii) State exception.--Clause (i) 
                        shall not apply in the case of a State 
                        that elects to regulate the coverage 
                        described in such clause as coverage in 
                        the small group market.
          (2) Large employer.--The term ``large employer'' 
        means, in connection with a group health plan with 
        respect to a calendar year and a plan year, an employer 
        who employed an average of at least 51 employees on 
        business days during the preceding calendar year and 
        who employs at least 2 employees on the first day of 
        the plan year.
          (3) Large group market.--The term ``large group 
        market'' means the health insurance market under which 
        individuals obtain health insurance coverage (directly 
        or through any arrangement) on behalf of themselves 
        (and their dependents) through a group health plan 
        maintained by a large employer.
          (4) Small employer.--The term ``small employer'' 
        means, in connection with a group health plan with 
        respect to a calendar year and a plan year, an employer 
        who employed an average of at least 1 but not more than 
        50 employees on business days during the preceding 
        calendar year and who employs at least 1 employees on 
        the first day of the plan year.
          (5) Small group market.--The term ``small group 
        market'' means the health insurance market under which 
        individuals obtain health insurance coverage (directly 
        or through any arrangement) on behalf of themselves 
        (and their dependents) through a group health plan 
        maintained by a small employer.
          (6) Application of certain rules in determination of 
        employer size.--For purposes of this subsection--
                  (A) Application of aggregation rule for 
                employers.--all persons treated as a single 
                employer under subsection (b), (c), (m), or (o) 
                of section 414 of the Internal Revenue Code of 
                1986 shall be treated as 1 employer.
                  (B) Employers not in existence in preceding 
                year.--In the case of an employer which was not 
                in existence throughout the preceding calendar 
                year, the determination of whether such 
                employer is a small or large employer shall be 
                based on the average number of employees that 
                it is reasonably expected such employer will 
                employ on business days in the current calendar 
                year.
                  (C) Predecessors.--Any reference in this 
                subsection to an employer shall include a 
                reference to any predecessor of such employer.
          (7) State option to extend definition of small 
        employer.--Notwithstanding paragraphs (2) and (4), 
        nothing in this section shall prevent a State from 
        applying this subsection by treating as a small 
        employer, with respect to a calendar year and a plan 
        year, an employer who employed an average of at least 1 
        but not more than 100 employees on business days during 
        the preceding calendar year and who employs at least 1 
        employee on the first day of the plan year.

           *       *       *       *       *       *       *

                              ----------                              


                     INTERNAL REVENUE CODE OF 1986




           *       *       *       *       *       *       *
Subtitle K--Group Health Plan Requirements

           *       *       *       *       *       *       *


CHAPTER 100--GROUP HEALTH PLAN REQUIREMENTS

           *       *       *       *       *       *       *


Subchapter C--General Provisions

           *       *       *       *       *       *       *


SEC. 9832. DEFINITIONS.

  (a) Group Health Plan.--For purposes of this chapter, the 
term ``group health plan'' has the meaning given to such term 
by section 5000(b)(1).
  (b) Definitions Relating to Health Insurance.--For purposes 
of this chapter--
          (1) Health insurance coverage.--
                  (A) In general.--Except as provided in 
                subparagraph (B), the term ``health insurance 
                coverage'' means benefits consisting of medical 
                care (provided directly, through insurance or 
                reimbursement, or otherwise) under any hospital 
                or medical service policy or certificate, 
                hospital or medical service plan contract, or 
                health maintenance organization contract 
                offered by a health insurance issuer. Such term 
                shall not include a stop-loss policy obtained 
                by a self-insured health plan or a plan sponsor 
                of a group health plan that self-insures the 
                health risks of its plan participants to 
                reimburse the plan or sponsor for losses that 
                the plan or sponsor incurs in providing health 
                or medical benefits to such plan participants 
                in excess of a predetermined level set forth in 
                the stop-loss policy obtained by such plan or 
                sponsor.
                  (B) No application to certain excepted 
                benefits.--In applying subparagraph (A), 
                excepted benefits described in subsection 
                (c)(1) shall not be treated as benefits 
                consisting of medical care.
          (2) Health insurance issuer.--The term ``health 
        insurance issuer'' means an insurance company, 
        insurance service, or insurance organization (including 
        a health maintenance organization, as defined in 
        paragraph (3)) which is licensed to engage in the 
        business of insurance in a State and which is subject 
        to State law which regulates insurance (within the 
        meaning of section 514(b)(2) of the Employee Retirement 
        Income Security Act of 1974, as in effect on the date 
        of the enactment of this section). Such term does not 
        include a group health plan.
          (3) Health maintenance organization.--The term 
        ``health maintenance organization'' means--
                  (A) a federally qualified health maintenance 
                organization (as defined in section 1301(a) of 
                the Public Health Service Act (42 U.S.C. 
                300e(a))),
                  (B) an organization recognized under State 
                law as a health maintenance organization, or
                  (C) a similar organization regulated under 
                State law for solvency in the same manner and 
                to the same extent as such a health maintenance 
                organization.
  (c) Excepted Benefits.--For purposes of this chapter, the 
term ``excepted benefits'' means benefits under one or more (or 
any combination thereof) of the following:
          (1) Benefits not subject to requirements.--
                  (A) Coverage only for accident, or disability 
                income insurance, or any combination thereof.
                  (B) Coverage issued as a supplement to 
                liability insurance.
                  (C) Liability insurance, including general 
                liability insurance and automobile liability 
                insurance.
                  (D) Workers' compensation or similar 
                insurance.
                  (E) Automobile medical payment insurance.
                  (F) Credit-only insurance.
                  (G) Coverage for on-site medical clinics.
                  (H) Other similar insurance coverage, 
                specified in regulations, under which benefits 
                for medical care are secondary or incidental to 
                other insurance benefits.
          (2) Benefits not subject to requirements if offered 
        separately.--
                  (A) Limited scope dental or vision benefits.
                  (B) Benefits for long-term care, nursing home 
                care, home health care, community-based care, 
                or any combination thereof.
                  (C) Such other similar, limited benefits as 
                are specified in regulations.
          (3) Benefits not subject to requirements if offered 
        as independent, noncoordinated benefits.--
                  (A) Coverage only for a specified disease or 
                illness.
                  (B) Hospital indemnity or other fixed 
                indemnity insurance.
          (4) Benefits not subject to requirements if offered 
        as separate insurance policy.--Medicare supplemental 
        health insurance (as defined under section 1882(g)(1) 
        of the Social Security Act), coverage supplemental to 
        the coverage provided under chapter 55 of title 10, 
        United States Code, and similar supplemental coverage 
        provided to coverage under a group health plan.
  (d) Other Definitions.--For purposes of this chapter--
          (1) COBRA continuation provision.--The term ``COBRA 
        continuation provision'' means any of the following:
                  (A) Section 4980B, other than subsection 
                (f)(1) thereof insofar as it relates to 
                pediatric vaccines.
                  (B) Part 6 of subtitle B of title I of the 
                Employee Retirement Income Security Act of 1974 
                (29 U.S.C. 1161 et seq.), other than section 
                609 of such Act.
                  (C) Title XXII of the Public Health Service 
                Act.
          (2) Governmental plan.--The term ``governmental 
        plan'' has the meaning given such term by section 
        414(d).
          (3) Medical care.--The term ``medical care'' has the 
        meaning given such term by section 213(d) determined 
        without regard to--
                  (A) paragraph (1)(C) thereof, and
                  (B) so much of paragraph (1)(D) thereof as 
                relates to qualified long-term care insurance.
          (4) Network plan.--The term ``network plan'' means 
        health insurance coverage of a health insurance issuer 
        under which the financing and delivery of medical care 
        are provided, in whole or in part, through a defined 
        set of providers under contract with the issuer.
          (5) Placed for adoption defined.--The term 
        ``placement'', or being ``placed'', for adoption, in 
        connection with any placement for adoption of a child 
        with any person, means the assumption and retention by 
        such person of a legal obligation for total or partial 
        support of such child in anticipation of adoption of 
        such child. The child's placement with such person 
        terminates upon the termination of such legal 
        obligation.
          (6) Family member.--The term ``family member'' means, 
        with respect to any individual--
                  (A) a dependent (as such term is used for 
                purposes of section 9801(f)(2)) of such 
                individual, and
                  (B) any other individual who is a first-
                degree, second-degree, third-degree, or fourth-
                degree relative of such individual or of an 
                individual described in subparagraph (A).
          (7) Genetic information.--
                  (A) In general.--The term ``genetic 
                information'' means, with respect to any 
                individual, information about--
                          (i) such individual's genetic tests,
                          (ii) the genetic tests of family 
                        members of such individual, and
                          (iii) the manifestation of a disease 
                        or disorder in family members of such 
                        individual.
                  (B) Inclusion of genetic services and 
                participation in genetic research.--Such term 
                includes, with respect to any individual, any 
                request for, or receipt of, genetic services, 
                or participation in clinical research which 
                includes genetic services, by such individual 
                or any family member of such individual.
                  (C) Exclusions.--The term ``genetic 
                information'' shall not include information 
                about the sex or age of any individual.
          (8) Genetic test.--
                  (A) In general.--The term ``genetic test'' 
                means an analysis of human DNA, RNA, 
                chromosomes, proteins, or metabolites, that 
                detects genotypes, mutations, or chromosomal 
                changes.
                  (B) Exceptions.--The term ``genetic test'' 
                does not mean--
                          (i) an analysis of proteins or 
                        metabolites that does not detect 
                        genotypes, mutations, or chromosomal 
                        changes, or
                          (ii) an analysis of proteins or 
                        metabolites that is directly related to 
                        a manifested disease, disorder, or 
                        pathological condition that could 
                        reasonably be detected by a health care 
                        professional with appropriate training 
                        and expertise in the field of medicine 
                        involved.
          (9) Genetic services.--The term ``genetic services'' 
        means--
                  (A) a genetic test;
                  (B) genetic counseling (including obtaining, 
                interpreting, or assessing genetic 
                information); or
                  (C) genetic education.
          (10) Underwriting purposes.--The term ``underwriting 
        purposes'' means, with respect to any group health 
        plan, or health insurance coverage offered in 
        connection with a group health plan--
                  (A) rules for, or determination of, 
                eligibility (including enrollment and continued 
                eligibility) for benefits under the plan or 
                coverage;
                  (B) the computation of premium or 
                contribution amounts under the plan or 
                coverage;
                  (C) the application of any pre-existing 
                condition exclusion under the plan or coverage; 
                and
                  (D) other activities related to the creation, 
                renewal, or replacement of a contract of health 
                insurance or health benefits.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

                              Introduction

    Committee Democrats are concerned about H.R. 1304, the 
Self-Insurance Protection Act and were also troubled by the 
Majority's insistence on considering health-related legislation 
while two other Committees (Energy and Commerce and Ways and 
Means) simultaneously considered legislation to gut the 
Affordable Care Act (ACA).

     Progress of the ACA Helps Small Businesses & Working Families

    The ACA took steps to level the playing field for small 
businesses and workers. The ACA added reforms to ensure that 
one small business with an older or sick employee or owner is 
not disadvantaged compared to other small businesses. The 
medical loss ratio provision of the ACA requires insurance, 
including plans that cover small businesses, to spend at least 
80% of premiums on health care claims and quality improvement, 
ensuring that premium dollars go toward the actual health costs 
of covering the small business and its employees, and not just 
profits. Further, the ACA created more options for employers 
and workers through the creation of the Small Business Health 
Options Program (SHOP) and included a tax credit to defray the 
cost of health insurance for their employees. The ACA also 
establishes several safeguards for workers and families. Thanks 
to the ACA, most insurance plans must now provide coverage 
without cost sharing for certain preventive health services, 
including pap smears and mammograms for women, well-child 
visits, flu shots, and more. Early estimates, after the ACA's 
passage, showed that there were around 129 million Americans 
with a pre-existing condition, 82 million of whom were enrolled 
in employer-based coverage.\1\ For these millions of American 
workers, the ACA means that losing a job does not mean losing 
health insurance coverage.
---------------------------------------------------------------------------
    \1\Department of Health and Human Services, At Risk: Pre-Existing 
Conditions Could Affect 1 in 2 Americans: 129 Million People Could be 
Denied Affordable Coverage Without Health Reform, (November 1, 2011) 
available at: https://aspe.hhs.gov/sites/default/files/pdf/76376/
index.pdf.
---------------------------------------------------------------------------

The Republican Replacement Plan Threatens the Health Insurance Security 
                          of American Families

    Two days prior to the Committee's consideration of the 
three bills, Republicans released their ACA replacement plan, 
the American Health Care Act. At the same time, a recent poll 
shows public support for the ACA has reached its highest level 
on record.\2\ The Ways and Means and Energy and Commerce 
Committees moved the bill forward through the Committee 
process, despite the fact that the Congressional Budget Office 
had not yet released estimates on the legislation's impact on 
coverage or cost. Committee Democrats expressed their concern 
about the lack of transparency in moving the bill forward and 
also further expressed concern that the markup in the Education 
and the Workforce Committee occurred simultaneous to this 
process--essentially forcing the Committee to consider 
legislation that represents a moving target.
---------------------------------------------------------------------------
    \2\Pew Research Center, Support for 2010 Health Care Law Reaches 
New High, (February 23, 2017) available at: http://www.pewresearch.org/
fact-tank/2017/02/23/support-for-2010-health-care-law-reaches-new-
high/.
---------------------------------------------------------------------------

     Self-Insurance can Pose Risks to Small Businesses and Workers

    A self-insured group health plan (or a `self-funded' plan) 
is one in which the employer assumes the financial risk for 
providing health care benefits to its employees. In practical 
terms, self-insured employers pay for each out-of-pocket claim 
as it is incurred instead of paying a fixed premium to an 
insurance carrier, like a fully-insured plan. Both fully 
insured and self-insured plans are regulated by the Employee 
Retirement Income Security Act of 1974 (ERISA). However, self-
insured plans are not required to cover health care services 
for state-mandated benefits, as fully insured plans are, and 
they are exempt from certain provisions of the ACA (e.g., the 
medical loss ratio and the health insurer fee). Because self-
insurance may offer advantages--such as greater flexibility in 
benefit design and lower costs--they are especially attractive 
to large firms with enough employees to spread risk adequately 
to avoid the financial fallout from potentially catastrophic 
medical costs of a single employee or a few employees.
    It is common for self-insured plans to purchase stop-loss 
insurance which protects plans from catastrophic financial 
losses. Stop-loss is not regulated at the federal level and 
enjoys limited and varied regulation at the state level. In 
many cases, the lines are blurred between stop-loss insurance 
and conventional insurance; a self-insured plan with a specific 
attachment point (the point in which the stop-loss begins 
coverage) of $5,000 functions in the same way as a plan with a 
$5,000 deductible.\3\
---------------------------------------------------------------------------
    \3\Center for American Progress, ``The Threat of Self-Insured Plans 
Among Small Businesses'', (June 19, 2013) available at: https://
www.americanprogress.org/issues/healthcare/reports/2013/06/19/65790/
the-threat-of-self-insured-plans-among-small-businesses/. 
---------------------------------------------------------------------------
    All employers face risks when self-insuring, but small 
employers run the risk of incurring unmanageable losses if an 
employee suffers an unexpected injury or illness. Although some 
risk can be mitigated by obtaining stop-loss insurance, stop-
loss coverage also presents its own risks. While these policies 
can be cheaper for employers with a healthier and younger 
workforce, the premiums can be increased or workers can be 
denied renewal if their health declines or they become more 
expensive to cover. Stop-loss insurance can pick its market and 
its availability is not guaranteed for an employer.
    Stop-loss policies also often engage in lasering. Lasering 
is the practice of assigning a different attachment point or 
denying coverage altogether for an employee based on health 
status, allowing stop-loss insurers to set higher attachment 
points for employees with costly pre-existing conditions, which 
then transfers the liability for these employees' costs back to 
the employer and employee.\4\ While the ACA explicitly prevents 
this discriminatory practice, this protection does not apply to 
self-funded plans.\5\ Stop-loss also often requires 
notification if ``new risk'' is incurred. Employers are legally 
prohibited from discriminating on the basis of health status, 
but stop-loss insurers are not, and many of the policies have 
provisions that will trigger immediate, or even retroactive, 
increased premiums when the stop-loss insurer receives greater-
than-expected claims.\6\ For these and other reasons, the 
National Association of Insurance Commissioners has indicated 
that, ``. . . because stop loss insurance products are not 
generally required to conform to state or federal health 
insurance law, including the ACA, there may be exposure to 
additional risk in some stop loss insurance products that is 
not immediately apparent.''\7\
---------------------------------------------------------------------------
    \4\Center on Health Insurance Reform Blog Post, As Self-Funding 
Increases in Popularity, Two States Step up to Address Potential Stop-
Loss Policy Concerns, (March 11, 2016) available at: http://
chirblog.org/as-self-funding-increases-in-popularity-two-states-step-
up/.
    \5\Id.
    \6\National Association of Insurance Commissioners, White Paper: 
Stop Loss Insurance, Self-funding and the ACA, (2015) available at: 
http://www.naic.org/documents/SLI_SF.pdf.
    \7\Id.
---------------------------------------------------------------------------

                  Committee Consideration of H.R. 1304

    Committee Democrats do not oppose the use of stop-loss 
insurance to help employers mitigate their risk when they 
choose to self-insure; Democrats also want to make certain that 
both employers and employees are protected when self-insuring 
and purchasing stop-loss and are aware of the risks of doing 
so.
    The Self-Insurance Protection Act, introduced by 
Representative Roe, would provide that stop-loss insurance is 
not health insurance coverage for the purposes of ERISA, the 
Public Health Service Act, and the Internal Revenue Code. Due 
to a ``Request for Information Regarding Stop Loss Insurance'' 
issued in 2012 by the Departments of Treasury/Labor/Health and 
Human Services,\8\ there was concern that the administration 
would regulate stop-loss insurance. This legislation was 
previously introduced largely in response to that concern. 
There has been no recent indication that the federal government 
is seeking to regulate stop-loss insurance, though some 
consumer groups and researchers have expressed concern about 
the inadequacy of the current regulatory framework for stop-
loss.
---------------------------------------------------------------------------
    \8\Departments of the Treasury, Labor, and Health and Human 
Services, Request for Information Regarding Stop Loss Insurance, (May 
1, 2012) available at: http://webapps.dol.gov/FederalRegister/
HtmlDisplay.aspx?DocId=26054&AgencyId;=8&DocumentType;=3. 
---------------------------------------------------------------------------
    Some states have taken action to address the concerns and 
threats that stop-loss insurance can pose to employers and 
workers, particularly small businesses. For example, 
Connecticut issued guidance to insurers prohibiting them from 
imposing an attachment point for a single enrollee that is 
greater than three times the attachment point for the overall 
policy.\9\ Some states, including Delaware, New York, and 
Oregon, have prohibited the sale of stop-loss to small 
employers.\10\ North Carolina permits stop-loss insurance, but 
regulates it as if it were normal health insurance when it is 
provided to small employers.\11\
---------------------------------------------------------------------------
    \9\Center on Health Insurance Reform Blog Post, As Self-Funding 
Increases in Popularity, Two States Step up to Address Potential Stop-
Loss Policy Concerns, (March 11, 2016) available at: http://
chirblog.org/as-self-funding-increases-in-popularity-two-states-step-
up/. 
    \10\Mark Hall, Regulating Stop-Loss Coverage May Be Needed To Deter 
Self-Insuring Small Employers From Undermining Market Reforms, Health 
Affairs, (February 2012), available at: http://
content.healthaffairs.org/content/31/2/316.full#ref-16.
    \11\Id.
---------------------------------------------------------------------------
    Democrats offered a number of amendments to make 
improvements to the bill. The first amendment, offered by 
Representative Takano, expressed a sense of Congress that any 
health care insurance legislation should build on the current 
progress of the ACA, as measured by CBO analysis that 
demonstrates improvements in cost and coverage. That amendment 
was withdrawn.
    Representative Bonamici offered a clarifying amendment to 
ensure that the legislation would not be construed to restrict 
the ability of states to regulate stop-loss policies. She 
explained, ``Several states, including my home state of Oregon, 
have regulations in place to protect consumers, both business 
owners and employees, when it comes to stop-loss insurance. I 
am concerned that the bill before us may preempt those consumer 
protections and prevent a State from determining how to best 
regulate the stop-loss insurance being offered within its 
borders.'' At the request of Ranking Member Scott, Chairwoman 
Foxx agreed to include such clarifying language in the 
Committee report, accepting and agreeing with the intent of 
Representative Bonamici's amendment. This clarification is 
vital to ensuring that nothing in the bill is erroneously 
construed to preempt or restrict states' ability to regulate 
stop-loss policies as states see fit or otherwise restrict 
effective oversight and regulation of these policies at the 
state level. Based on the understanding between Chairwoman Foxx 
and Ranking Member Scott that this clarification would be 
included in the Committee's official report, Representative 
Bonamici withdrew her amendment.
    Representative Polis offered an amendment to create a 
public insurance option, which was ruled not germane. Committee 
Democrats remain committed to building on the progress of the 
ACA and proposing constructive measures, such as the public 
option, that will increase competition and help drive down 
costs for working families.
    While Democrats continue to be concerned about the lack of 
clarity of the legislation and the possible unintended 
consequences, Committee Democrats have worked with the Majority 
to ensure that report language addresses some of these 
concerns, particularly those raised by the Bonamici amendment.
    H.R. 1304 was favorably reported, as amended, by voice 
vote.

                               Conclusion

    After seven years of disparaging the ACA, Republicans 
released a repeal and replacement plan that will leave millions 
of Americans worse off. Meanwhile, legislation considered in 
the Committee would not work to build on the progress of the 
ACA or improve and expand coverage. Committee Democrats 
continue to express concerns about the ambiguity of H.R. 1304, 
the Self-Insurance Protection Act and its impact on current and 
future state regulation of stop-loss insurance, particularly as 
Republicans seek to dismantle the entirety of the ACA. 
Committee Democrats are committed to health care as a right, 
not a privilege for only the healthiest and wealthiest 
Americans.

                                   Robert C. ``Bobby'' Scott, Ranking 
                                       Member.
                                   Susan A. Davis.
                                   Raul M. Grijalva.
                                   Joe Courtney.
                                   Marcia L. Fudge.
                                   Jared Polis.
                                   Gregorio Kilili Camacho Sablan.
                                   Frederica S. Wilson.
                                   Suzanne Bonamici.
                                   Mark Takano.
                                   Alma S. Adams.
                                   Mark DeSaulnier.
                                   Donald Norcross.
                                   Lisa Blunt Rochester.
                                   Raja Krishnamoorthi.
                                   Carol Shea-Porter.
                                   Adriano Espaillat.

                                  [all]