DALLAS – The Department of Labor’s proposed rulemaking released today would help clear the way for employers to band together in associations and self-insure, and is a good first step in the ongoing but challenging effort to provide employers and employees more flexibility under Obamacare.
The rulemaking comes in response to President Trump’s Executive Order 13813 from October 12 instructing the Departments of Labor, Treasury and Health and Human Services to look for ways to increase access to affordable health insurance in compliance with existing law (i.e., the Affordable Care Act).
The Institute for Policy Innovation’s Dr. Merrill Matthews previously explained the executive order and its implications in the Wall Street Journal, and praised the Department of Labor’s proposed rulemaking today.
“For decades federal law has allowed (mostly) large employers to self-insure, meaning the employer, not an insurer, bears the risk and pays the health care claims,” said Matthews. “Self-insured employers have been able to avoid many of the state and federal mandates imposed on the small group and individual markets, which helped employers keep down the cost of coverage.”
Matthews also said the Labor Department has reviewed the relevant law, concluding that it permits certain associations to self-insure under ERISA. According to the just-released document: “This proposed regulation would define the term ‘group or association of employers’ under ERISA section 3(5) more broadly, in a way that would allow more freedom for businesses to join together in organizations that could offer group health coverage regulated under the ACA as large group coverage.”
“IPI applauds this step,” said Matthews. “It does not repeal Obamacare, and its impact is likely to be limited — to those small employers, and perhaps some self-employed, that are able to band together in qualified associations. The individual market, where about 17 million Americans buy their own coverage, was the hardest hit by Obamacare’s exploding premiums and fleeing health insurers, and the proposed changes are unlikely to provide much relief for them. Thus, Congress still needs to repeal the Affordable Care Act.”
“But apart from full repeal, the new tax reform legislation ending the mandate to have coverage and the Labor Department’s expansion of ERISA both help people find alternatives to the devastating impact of Obamacare,” said Matthews.