Business Savior – Self Insurance & Shifting Sick Workers To Exchanges

According to Richard E. Twietmeyer of M3, a Madison, Wisconsin-based insurance brokerage, “a handful of our clients, mostly in the 100- to 1,000-employee self-insurance market, have independently inquired about this and sought out legal counsel on the question.” As he told Bloomberg, “it’s not something I’m suggesting.”

The problem is that the strategy may be illegal and put employers at risk for discrimination claims, Quarles & Brady attorney John L. Barlament told the news service. Despite the possibility of discrimination claims, he said he’s had “multiple conversations” with business owners and insurance brokers interested in paying chronically ill workers to obtain coverage via the individual exchanges rather than through the company health plan.

Early in its history, critics of the health care reform worried that companies would end employer-sponsored health insurance coverage and shift all their workers to the individual insurance exchanges, a fear that has yet to materialize. However, even if companies only send their most expensive-to-insure employees to the Obamacare exchanges, the marketplaces could be burdened.

The success of the exchange system — the cornerstone provision of the Affordable Care Act — depends on a proper mix of enrollees. Insurers calculated premium prices that were meant to be affordable on the assumption that young, healthy, and therefore cheap-to-insure individuals would be moved into the new marketplaces because their current plans would not comply with the Obamacare’s new benefit requirements and be canceled.