Proposed HB 1578 Will Affect Stop Loss Market in Texas

A stop loss carrier sent this to us this morning which bears worth watching:

HB 1578 has been introduced in the Texas Legislature.  The Bill would affect stop loss and reinsurance policies.  Under the Bill reinsurance would be prohibited and stop loss insurance required to cover a self-funded plan.  All stop loss policies must be approved by the Commissioner.  An individual stop loss policy must have a deductible between $5000 and $100,000 or it will not be approved. 

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Editor’s Note: This is another example of government interferance in private enterprise. It appears that the State of Texas wants to become an insurer and will prohibit the private sector from reinsuring medical stop loss policies. Specific stop loss limit of $100,000 will significantly increase costs for larger self-funded groups that currently have their specific level at $250,000 or higher.  And, for those groups, it would not be actuarial sound to limit their exposure to $100,000.

Congress Begins Task of Health Care Reform

Health care reform has taken center stage this week and we expect headline news on this in the coming days. Yet, no one really knows what changes are to be proposed or what specific directions a national health care plan will take.

Our predictions include a two payer system; a government run system that will compete with private health care companies such as Aetna and Cigna. This arrangement will be problematic since a government run plan can mandate costs while a private health care company can only negotiate costs.  Our second prediction is all health care costs will be taxable income to plan beneficiaries. Our third prediction is that the government will mandate expense ceilings for private health care plans as well as mandated target loss ratios. This will diminish the role, and the need for, independent insurance agents and brokers as well as damper financial interests of private payers such as United HealthCare, Aetna and their respective share holders. In time, the private sector health care payers will fade away and a one payer natiional health plan will become reality.