Exclusive!!! photo of Texas’ elected representatives’ legislation development process
(earlier reporting on TM’s health benefits thing is here.)
The Net – If employers and their employees aren’t happy with Texas Mutual’s health benefits program, TM’s brand will suffer.
TM will NOT be selling health insurance, rather it will be selling “level funded plans” – a form of self-insurance. TM will be acting as a TPA and stop-loss carrier for health benefits plans.
This is a BIG deal, because unlike health insurance plans, Self-insured plans are regulated by the Feds under ERISA – NOT by the State of Texas.
ERISA is hugely complicated; very few small business brokers understand ERISA.
And you can rest assured NONE of their employer customers will have a clue…that is, until something hits the fan. Oh, and under ERISA, the employer is legally responsible and liable for compliance – NOT TM, the broker, stop-loss carrier, TPA, or any other party.
Here’s just a few of the issues…
- Unlike the employer’s single contract for health insurance, ERISA plans have multiple contracts (listed below) — all contracts must be completely consistent on coverage, financial liability, and which benefits are covered at what level.
- Stop loss – stop loss carriers determine what they’ll pay for; unless the contract explicitly states it will pay for EVERYTHING that’s approved by the employer, the carrier alone determines what it will – and won’t – pay.
- Oh, and stop-loss contracts do NOT pay for medical management fees, like those incurred in reducing huge hospital bills – the employer does.
- TPA
- Employer
- Possibly others e.g. network, medical management
- Stop loss – stop loss carriers determine what they’ll pay for; unless the contract explicitly states it will pay for EVERYTHING that’s approved by the employer, the carrier alone determines what it will – and won’t – pay.
- Brokers will have to explain to employers how TM’s plan is different from “health insurance” – but very few – if any – brokers will know or be able to clearly explain those differences.
- Example – ERISA plans don’t have to cover Essential Benefits (maternity, mental health, substance abuse treatment, prescription drugs etc.)…In fact ERISA plans can cover – or not cover – anything the plan sponsor (employer) wants. TM’s health benefits plans will likely be different from health insurance plans…thus comparing TM plans with alternatives will be complicated and hard to explain.
- Employee’s spouse…“wait, you’re telling me my pregnancy isn’t covered??!!”
- Example – ERISA plans don’t have to cover Essential Benefits (maternity, mental health, substance abuse treatment, prescription drugs etc.)…In fact ERISA plans can cover – or not cover – anything the plan sponsor (employer) wants. TM’s health benefits plans will likely be different from health insurance plans…thus comparing TM plans with alternatives will be complicated and hard to explain.
- TM will medically underwrite employers…that is, review all past claims and medical records to identify employees’ and their families’ health problems, then adjust the rates and/or refuse to cover treatment for those pre-existing conditions.
- This directly conflicts with several sub-sections of Sec. 2054-603 of Texas’ Insurance Code which reads:
TM must “fully explore all health coverage options that may be offered under this subchapter and place emphasis on:- ensuring adequacy of benefits and access to care for individuals in this state with preexisting conditions;
- issuing coverage in a manner that does not discriminate against individuals with preexisting conditions
- ensuring equitable costs regardless of gender or prospects of pregnancy or childbirth.”
(note the language says “place emphasis on”, which allows major wiggle room)
Employee’s spouse…“wait, you’re telling me my diabetes/hypertension/ depression isn’t covered?”
- This directly conflicts with several sub-sections of Sec. 2054-603 of Texas’ Insurance Code which reads:
What does this mean for you?
Do NOT blame Texas Mutual for this…blame Texas’ Legislature and Governor.
Next – why this won’t do a damn thing to solve Texas’ health care mess, but Legislators and the Governor score political points.
Do I understand this correctly that the TM health insurance program will subject all of the participating employers to the demands that self-insured employers are subject to? Given as the bulk of TM’s policyholders are likely small and medium sized business with no experience with self insurance this is asking for trouble
HI Peter – Thanks for the note and opportunity to clarify…Just to be clear, this applies only to TM’s health plan (TM doesn’t offer a health insurance program per se)…I know you stated that but don’t want anyone to think TM’s WC policyholders are affected.
be well Joe
Hello, Joe. Your “sky is falling” approach to self-insurance for small employers, ERISA being too complicated, and brokers having no way to understand or protect the interests of employees and their families is the exact same, false attack made on Texas injury benefit plans as an alternative to TX workers’ comp. The fact of the matter is that insurance carriers, brokers, TPA’s and advisers have administered effective, self-insured, ERISA-based injury benefit programs for tens of thousands of small employers and their workers for over 30 years. Every examination of relevant data demonstrates that TX injury benefit plans are the best performing occupational injury system in America. They are not the status quo, so they are challenged by current system incumbents who do not want to compete with creative upstarts. ERISA was enacted 49 years ago, and for the past 34 years, tens of thousands of small TX employers have enjoyed better employee communications, better medical outcomes on occupational injuries, and higher disability benefits, while driving down employer costs. Whether TX Mutual should be in the group health market or will learn from and can replicate the above success remains to be seen. But this “self-insurance, ERISA” angle of attack doesn’t hold water.
Hi Bill – always interesting to hear your perspective. Got to admit your abrupt transition from attacking my post to promoting your non-subscriber business gave me a bit of whiplash.
Notably, your only avenue of attack is some sort of false equivalency claim regarding ERISA as it is used in non-subscriber – a completely different business from group health benefits. Somehow you failed to address the central point of my post – Texas’ elected officials are trying to score political points by forcing a state-regulated entity to get into a business it knows nothing about.
You conveniently ignore that forcing Texas Mutual into health benefits will not fix – and actually will likely worsen – the core problems Texas’ Legislature claims it is trying to fix:
– a quarter of working age Texans are uninsured,
– rural hospitals are closing,
– others are shutting down critical care centers,
– healthcare is increasingly unaffordable, and
– health outcomes for poor and non-white Texans are deplorable.
Reality is these “level-funded” plans have been in Texas for years, and – head smack! – adoption hasn’t remedied your state’s healthcare problems.
That said, you did (sort of) get one thing right…your “sky is falling” statement is true – for Texans’ healthcare.
To quote HL Mencken, “You get the government you deserve, and you deserve to get it good and hard.”
All my best – Joe
Touche’, Joe. Living in an over-regulated, under-performing state tends to sharpen one’s wit. Two further thoughts:
1. Nonsubscriber injury benefit plans are group health plans under ERISA.
2. What evidence do you have that Texas Mutual is being forced to do anything?
Best regards to you, as well, Joe.
Good morning Bill and happy Fathers’ Day.
Not sure if your characterization of home state refers to your domicile or mine… ;)
Agree that Texas’ propensity to legislate and regulate individuals’ freedom of expression and interfere with parental rights would make any freedom-loving person look for relief in humor. That and the bad-and-getting worse state of Texas’ health care system, highest-in-the-nation percentage of working age people without health insurance, the state’s interference with Harris County’s control over its citizens ability to vote, the problematic state of Texas’ electric grid, and state elected officials upending local elected officials’ long-standing authority to address worker protections, predatory lending practices and the like must make one laugh…or cry.
Losing the Micron giga factory to Syracuse must have been a really tough blow as well…the tens of thousands of jobs paying well above six figures along with massive infrastructure-related hiring is certainly strong evidence of New York’s attractiveness to employers seeking great infrastructure; cheap, clean and reliable electric power; strong schools; high-quality workers and effective political leadership…
Not to quibble, but under ERISA, non-subscriber injury benefit plans are “employee welfare benefit plans” – my wording was an effort to distinguish non-subscribers’ occupational injury benefit plans from group health benefit plans.
Lastly, the evidence that TM is being forced to do this was provided in the links to legislation (HB 3752) and changes to Texas’ Insurance Code embedded in the posts. For reference, here is the original post…http://www.joepaduda.com/2023/06/08/can-texas-mutual-help-texas-health-insurance-healthcare-needs/
Notably, the final language in 3752 does not explicitly force TM to provide health benefits or health insurance, however the legislative intent is quite clear. As TM is controlled by the State (the majority of the Board is appointed by the Governor as is TM’s “presiding officer”), it most certainly must comply with the Legislature’s and Governor’s directives.
All that aside, this will do nothing to address the very real problems with healthcare in Texas. While we certainly have our disagreements, I hope we can agree that those problems need real solutions, ones that cover more Texans, compensate providers fairly, and ensures much better access to care especially for poor folks and those in rural areas.
Enjoy the weekend – Joe