California insurance regulators are pushing for new legislation that would institute limitations on a controversial form of health insurance that is targeting small businesses. This coverage is a type of self-insurance that is designed for businesses with 25 or fewer employees. Regulators claim that these policies are being used by health insurers to find companies with the healthiest workers, lowering their risk of costly payouts. Insurance Commissioner Dave Jones is concerned that these policies undermine one of the key principles of the Affordable Care Act: Lowering premiums by allowing insurers to share the risk through health insurance exchanges.
Insurers are defending their position by claiming that these policies are the result of rising demand amongst employers for affordable coverage. The Self-Insurance Industry Institute of America, a trade group serving insurers, is pressuring regulators not to interfere with these practices for the sake of a stable market. The group claims that insurers have a firm handle on the situation and are able to control costs effectively while still being able to provide services that benefit consumers. Regulators argue that these insurers are instituting policies without considering the fate of the Affordable Care Act.
Regulators are pursuing legislation that they claim will ensure the success of the small group insurance market as health care reforms begin to be enacted. They claim that insurers are acting as though the Affordable Care Act does not exist and are not taking the steps necessary to comply with provisions of the law that will be enacted in 2014.