Insurance Companies at The Capital to Lobby

Health insurance companies will descend on the state capital today for two days of lobbying—and might need both of them to explain the bill at the top of their agenda.

The measure would allow businesses with 51 to 100 employees to continue purchasing stop-loss insurance next year. It’s sure to trigger a lot of quizzical looks from lawmakers, and the following questions:

Who’s taking away midsize companies’ ability to buy stop-loss policies? And why?

For that matter, what is stop-loss insurance?

For the answers, the Insider turned to Patrick Gillespie, director of state government affairs for Cigna, one of the insurers that sells stop-loss policies in New York. He could probably talk about stop-loss for weeks, were anyone inclined to listen that long. Fear not—the Insider boiled the explanations he gave during a 40-minute phone interview into a ready-to-eat meal.

The big picture: Stop-loss insurance protects employers who self-fund—that is, pay their workers’ health-care bills directly, rather than cover them through a traditional insurance policy. Self-funding can save companies money, but can destroy them if one or more employees racks up extraordinarily high medical bills. A stop-loss policy kicks in if that happens, limiting what they’ll have to pay in any given year.

If the legislature doesn’t pass (and Gov. Andrew Cuomo doesn’t sign) S.2366 and A.1154 this year, on Jan. 1, about 1,700 businesses with nearly 130,000 employees will stop self-funding because they—along with about 9,300 other midsize firms—will lose their legal right to buy stop-loss policies.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary