ERIC Fights Louisiana’s Reinsurance Program Proposal

ERIC is fighting back against Louisiana’s reinsurance program proposal. ERIC submitted comments to the Louisiana Department of Insurance regarding the implementation of the Louisiana Guaranteed Benefits pool, “a risk sharing program to provide payment to health insurance issuers for claims for health care services provided to eligible individuals with expected high health care costs for the purpose of lowering premiums for health insurance coverage offered in the individual market”. Act 412, passed in May 2019, tasks the Louisiana Commissioner of Insurance to find a pathway to partly fund the reinsurance program through an assessment on “health insurance issuers” (See statute 4 on page 9).

ERIC’s comments addressed the following two concerns:

1)  ERISA preempts a reinsurance program’s ability to financially assess self-insured plans

Preemption is applicable when a state law directly refers to ERISA plans or when it would impact ERISA plans financially or administratively. A financial assessment will force employers to pass on costs to Louisiana employees. What may be considered a small increase in cost could have a significant impact on some individuals, and it could cause plan beneficiaries to forego needed coverage or care. Placing an assessment on employers is not reinsurance; it is rather a redistribution of wealth from those with employer-sponsored health benefits, to those purchasing health care on the Affordable Care Act exchange in Louisiana.

2)  ERISA preempts a reinsurance program’s ability to administratively burden self-insured plans 

To comply with this assessment, carriers, and self-insured plan sponsors will have to submit to the state information on their plan participants, so that an assessment amount can be calculated. This will be an additional reporting requirement added to the list of compliance burdens that plan sponsors already face, and for multi-state employers, would give rise to a patchwork of varying and conflicting state reporting requirements that is forbidden under ERISA.

Our comments were submitted along with a signature from the Louisiana Business Group on Health, an organization working to improve the quality and value of health care in the state. Our comments have been guaranteed to be incorporated into the analysis of Act 412.

Article by Carly Sternberg, Health Policy Associate