Insurance Administration Releases Interim Stop-Loss Report

Report notes the value of the local government health cooperative for small county and municipal members.

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The Local Government Insurance Trust’s Health Cooperative is a primary concern with regard to the State’s new medical stop-loss law.

The Maryland Insurance Administration has released its interim report on medical stop-loss insurance. According to legislation passed last year, the report must include an assessment of the impact on local governments and small employers of any changes to the attachment points or consumer protections in medical stop-loss insurance policies and contracts.

MACo and MML opposed the stop-loss legislation as a threat to the Local Government Health Cooperative. Through the Cooperative, several small county and municipal governments obtain cost-effective health coverage for their employees. Ultimately, the legislation was passed with a grandfathering provision protecting current members of the Cooperative, and a requirement for further study.

MACo and MML met with the Maryland Insurance Administration over the interim to discuss data gathering that would support the analysis required in the report.  MACo, MML, and Benecon, the actuary for the Local Government Health Cooperative will be providing additional information to the Administration for the final report.

MACo and MML also submitted written and oral testimony before the Administration in a hearing held in September. Marty Hale, Director of Human Resources, Kent County testified as a county member of the Health Cooperative. In the testimony, MACo and MML representatives shared the importance of the local health cooperative and concerns that stop-loss legislation could negatively affect its viability. The testimony states,

For small counties and municipalities of all sizes, the Cooperative represents an opportunity to maintain relatively high benefit offerings for their employees through self-insurance, an option that would be unavailable to them acting alone. Through the Cooperative, counties and municipalities come together and support each other by sharing in both the risks and benefits of self-insurance. As a result, these local governments avoid unexpected and cost-prohibitive premium increases from year-to-year. Members have found that self-insurance allows for greater, more flexible and transparent coverage at a lower cost to employees. In turn, savings have been passed on to both taxpayers and employees.

The Maryland Insurance Administration’s interim report also describes the county and municipal input from the hearing,

MACo and MML provided written testimony voicing the organizations’ concern for the Maryland Local Government Health Cooperative (“Cooperative”). The Cooperative is an insurance pool whose membership is limited to Maryland’s counties, incorporated cities, and towns, and was established to allow public entities to more efficiently finance their employee health benefits through self-funding. The Cooperative was formed in 2010 and currently has 19 local government members.

For small counties and municipalities of all sizes, the Cooperative provides an opportunity to maintain relatively high benefit offerings for their employees through self-insurance, an option that would be unavailable to them acting alone. Through the Cooperative, counties and municipalities come together and support each other by sharing in both the risks and benefits of self-insurance. According to MACo and MML, these local governments avoid unexpected and cost-prohibitive premium increases from year-to-year. In turn, any savings are passed on to both taxpayers and employees.

The final report is due October 1, 2016.

For more information, read the Interim Report on the Use of Medical StopLoss Insurance in Self-Funded Employer Health Plans in Maryland, and our previous post on Conduit StreetMedical Stop-Loss Legislation Becomes Maryland Law.

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