[House Report 118-114]
[From the U.S. Government Publishing Office]
118th Congress } { Rept. 118-114
HOUSE OF REPRESENTATIVES
1st Session } { Part 1
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SELF-INSURANCE PROTECTION ACT
_______
June 20, 2023.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Ms. Foxx, from the Committee on Education and the Workforce, submitted
the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 2813]
The Committee on Education and the Workforce, to whom was
referred the bill (H.R. 2813) to amend the Employee Retirement
Income Security Act of 1974, the Public Health Service Act, and
the Internal Revenue Code of 1986 to exclude from the
definition of health insurance coverage certain medical stop-
loss insurance obtained by certain plan sponsors of group
health plans, and for other purposes, having considered the
same, reports favorably thereon with amendments and recommends
that the bill as amended do pass.
The amendments are as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Self-Insurance Protection Act''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Small and large employers offer health benefit plan
coverage to employees in self-funded arrangements using company
assets or a fund, or by paying premiums to purchase fully-
insured coverage from a health insurance company.
(2) Employers that self-fund health benefit plans will often
purchase stop-loss insurance as a financial risk management
tool to protect against excess or unexpected catastrophic
health plan claims losses that arise above projected costs paid
out of company assets.
(3) Stop-loss coverage insures the employer sponsoring the
health benefit plan against unforeseen health plan claims, does
not insure the employee health benefit plan itself, and does
not pay health care providers for medical services provided to
the employees.
(4) Employer-sponsored health benefit plans are regulated
under the Employee Retirement Income Security Act of 1974,
however, States regulate the availability and the coverage
terms of stop-loss insurance coverage that employers purchase
to protect company assets and to protect a fund against excess
or unexpected claims losses.
(5) Both large and small employers that choose to self-fund
must also be able to protect company assets or a fund against
excess or unexpected claims losses and States must reasonably
regulate stop-loss insurance to assure its availability to both
large and small employers.
SEC. 3. CERTAIN MEDICAL STOP-LOSS INSURANCE OBTAINED BY CERTAIN PLAN
SPONSORS OF GROUP HEALTH PLANS NOT INCLUDED UNDER
THE DEFINITION OF HEALTH INSURANCE COVERAGE.
Section 733(b)(1) of the Employee Retirement Income Security Act of
1974 (29 U.S.C. 1191b(b)(1)) is amended by adding at the end the
following sentence: ``Such term shall not include a stop-loss policy
obtained by a self-insured group health plan or a plan sponsor of a
group health plan that self-insures the health risks of its plan
participants to reimburse the plan or sponsor for losses that the plan
or sponsor incurs in providing health or medical benefits to such plan
participants in excess of a predetermined level set forth in the stop-
loss policy obtained by such plan or sponsor.''.
SEC. 4. EFFECT ON OTHER LAWS.
Section 514(b) of the Employee Retirement Income Security Act of 1974
(29 U.S.C. 1144(b)) is amended by adding at the end the following:
``(10) The provisions of this title (including part 7 relating to
group health plans) shall preempt State laws insofar as they may now or
hereafter prevent an employee benefit plan that is a group health plan
from insuring against the risk of excess or unexpected health plan
claims losses.''.
Amend the title so as to read:
A bill to amend the Employee Retirement Income Security Act
of 1974 to exclude from the definition of health insurance
coverage certain medical stop-loss insurance obtained by
certain plan sponsors of group health plans, and for other
purposes.
Purpose
H.R. 2813, the Self-Insurance Protection Act, amends the
Employee Retirement Income Security Act of 1974 (ERISA)\1\ to
clarify that federal regulators cannot redefine stop-loss
insurance as traditional health insurance in order to preserve
the option of self-funding. The bill also prohibits states from
regulating stop-loss insurance if regulations make stop-loss
insurance inaccessible to employers. By providing legal
certainty, the bill will help ensure workers and families
continue to have access to affordable, flexible self-insured
health plans.
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\1\29 U.S.C. Sec. 1001 et seq.
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Committee Action
112TH CONGRESS
First Session--Hearings
On February 9, 2011, the Committee on Education and the
Workforce (Committee) held a hearing entitled ``The Impact of
the Health Care Law on the Economy, Employers, and the
Workforce,'' which examined, among other things, the benefits
of self-insuring. Testifying before the Committee were Dr. Paul
Howard, Senior Fellow, Manhattan Institute, New York, New York;
Ms. Gail Johnson, President and CEO, Rainbow Station, Inc.,
Glenn Allen, Virginia; Dr. Paul Van de Water, Senior Fellow,
Center on Budget and Policy Priorities, Washington, D.C.; and
Mr. Neil Trautwein, Vice President and Employee Benefits Policy
Counsel, National Retail Federation, Washington, D.C.
On March 10, 2011, the Subcommittee on Health, Employment,
Labor and Pensions (HELP) held a hearing entitled ``The
Pressures of Rising Costs on Employer Provided Health Care,''
which examined, among other things, the benefits of self-
insurance. The witnesses were Mr. Tom Miller, Resident Fellow,
American Enterprise Institute, Washington, D.C.; Mr. Brett
Parker, Vice Chairman and Chief Financial Officer, Bowlmor
Lanes, New York, New York; Mr. Jim Houser, Owner, Hawthorne
Auto, Portland, Oregon; and Mr. J. Michael Brewer, President,
Lockton Benefit Group, Lockton Companies, LLC, Kansas City,
Missouri.
On June 7, 2011, the HELP Subcommittee held a field hearing
in Evansville, Indiana, entitled ``The Recent Health Care Law:
Consequences for Indiana Families and Workers,'' which
examined, among other things, the impact of the Affordable Care
Act (ACA) on self-funded plans. The witnesses were the
Honorable Mark Messmer, Indiana House of Representatives,
Messmer Mechanical, Jasper, Indiana; Ms. Robyn Crosson, Company
Compliance Services, State of Indiana Department of Insurance,
Indianapolis, Indiana; Ms. Sherry Lang, Human Resources
Director, Womack Restaurants, Terre Haute, Indiana; Mr. Denis
Johnson, VP of Operations, Boston Scientific, Spencer, Indiana;
Mr. David J. Carlson, M.D., General Surgeon, Deaconess
Hospital, Evansville, Indiana; and Mr. Glen Graber, President,
Graber Post Building, Inc., Odon, Indiana.
On October 13, 2011, the HELP Subcommittee held a hearing
entitled ``Regulations, Costs, and Uncertainty in Employer
Provided Health Care,'' which examined, among other things, the
characteristics and attributes of self-funded plans. The
witnesses were Ms. Grace-Marie Turner, President, Galen
Institute, Alexandria, Virginia; Mr. Dennis M. Donahue,
Managing Director, Wells Fargo Insurance Services USA, Inc.,
Chicago, Illinois; Mr. Ron Pollack, Executive Director,
Families USA, Washington, D.C.; and Ms. Robyn Piper, President,
Piper Jordan, San Diego, California.
Second Session--Hearings
On February 22, 2012, the HELP Subcommittee held a field
hearing in Butler, Pennsylvania, entitled ``Health Care:
Challenges Facing Pennsylvania's Workers and Job Creators,''
which examined, among other things, the benefits of self-
insuring. The witnesses were the Honorable Donald C. White,
Senator, Pennsylvania State Senate, Harrisburg, Pennsylvania;
Ms. Kathleen Bishop, President and CEO, Meadville-Western
Crawford, County Chamber of Commerce, Meadville, Pennsylvania;
Ms. Georgeanne Koehler, Pittsburg, Pennsylvania; Ms. Lori
Joint, Director of Government Affairs, Manufacturer and
Business Association, Erie, Pennsylvania; Ms.Patti-Ann
Kanterman, Chief Financial Officer, Associated Ceramics and
Technology, Inc., Sarver, Pennsylvania; Mr. Paul T. Nelson,
Owner and CEO, Waldameer Park, Inc., Erie, Pennsylvania; Mr.
Ralph Vitt, Owner, Vitt Insure, Pittsburg, Pennsylvania; and
Mr. Will Knecht, President, Wendell August Forge, Grove City,
Pennsylvania.
On May 31, 2012, the HELP Subcommittee held a hearing
entitled ``Barriers to Lower Health Care Costs for Workers and
Employers,'' which examined, among other things, self-insured
plans. The witnesses were Mr. Ed Fensholt, Senior Vice
President, Lockton Companies, LLC, Kansas City, Missouri; Mr.
Roy Ramthun, President, HAS Consulting Services, Washington,
D.C.; Ms. Jody Hall, Founder & Owner, Cupcake Royale, Seattle,
Washington; and Mr. Bill Streitberger, Vice President of Human
Resources, Red Robin, Greenwood Village, Colorado.
113TH CONGRESS
First Session--Hearings
On April 30, 2013, the HELP Subcommittee held a field
hearing in Concord, North Carolina, entitled ``Health Care
Challenges Facing North Carolina's Workers and Job Creators,''
during which witnesses discussed the negative impact of the
ACA, including on businesses that self-insure. The witnesses
were Mr. Chuck Horne, President, Hornwood Inc., Lilesville,
North Carolina; Ms. Tina Haynes, Chief Human Resource Officer,
Rowan-Cabarrus Community College, Salisbury, North Carolina;
Mr. Adam Searing, Director, Health Access Coalition, Raleigh,
North Carolina; Mr. Ken Conrad, Chairman, Libby Hill Seafood
Restaurants, Greenboro, North Carolina; Mr. Dave Bass, Vice
President, Compensation and Associate Wellness, Delhaize
America, Concord, North Carolina; Mr. Ed Tubel, Founder and
CEO, Tricor Inc., Charlotte, North Carolina; Dr. Olson Huff,
Pediatrician, Asheville, North Carolina; and Mr. Bruce Silver,
President and CEO, Racing Electronics, Concord, North Carolina.
On June 4, 2013, the Committee held a hearing entitled
``Reviewing the President's Fiscal Year 2014 Budget Proposal
for the U.S. Department of Health and Human Services,'' during
which members discussed the experiences of employers that self-
insure. The sole witness at the hearing was the Honorable
Kathleen Sebelius, Secretary of the U.S. Department of Health
and Human Services, Washington, D.C.
On July 23, 2013, the HELP Subcommittee and the Workforce
Protections Subcommittee jointly held a hearing entitled ``The
Employer Mandate: Examining the Delay and Its Effect on
Workplaces,'' which reviewed, among other things, the impact of
the ACA on the self-insured market. Witnesses were Ms. Grace-
Marie Turner, President, Galen Institute, Alexandria, Virginia;
Mr. Jamie T. Richardson, Vice President, White Castle System,
Inc., Columbus, Ohio; Mr. Ron Pollack, Executive Director,
Families USA, Washington, D.C.; and Dr. Douglas Holtz-Eakin,
President, American Action Forum, Washington, D.C.
On August 27, 2013, the HELP Subcommittee held a field
hearing in Lexington, Kentucky, entitled ``Health Care
Challenges Facing Kentucky's Workers and Job Creators,'' which
included an examination of self-insurance. Witnesses before the
subcommittee were Mr. Tim Kanaly, Owner and President, Gary
Force Honda, Bowling Green, Kentucky; Mr. Joe Bologna, Owner,
Joe Bologna's--Italian Pizzeria and Restaurant, Lexington,
Kentucky; Ms. Carrie Banahan, Executive Director, Office of the
Kentucky Health Benefit Exchange, Frankfort, Kentucky; Mr. John
Humkey, President, Employee Benefit Associates, Inc.,
Lexington, Kentucky; Ms. Janey Moores, President and CEO, BJM
and Associates, Inc., Lexington, Kentucky; Mr. Donnie Meadows,
Vice President of Human Resources, K-VA-T Food Stores, Inc.,
Abingdon, Virginia; Ms. Debbie Basham, Southwest Breast Cancer
Awareness Group, Louisville, Kentucky; and Mr. John McPhearson,
CEO, Lectrodryer, Richmond, Kentucky.
Second Session--Hearings
On February 26, 2014, the HELP Subcommittee held a hearing
entitled ``Providing Access to Affordable, Flexible Health
Plans through Self-Insurance,'' which examined self-insurance
and stop-loss insurance. The witnesses were Mr. Michael
Ferguson, President and CEO, Self-Insurance Institute of
America, Simpsonville, South Carolina; Mr. Wes Kelley,
Executive Director, Columbia Power and Water Systems, Columbia,
Tennessee; Ms. Maura Calsyn, Director of Health Policy, Center
for American Progress, Washington, D.C.; and Mr. Robert
Melillo, National Vice President of Risk Financing Solutions,
USI Insurance, Glastonbury, Connecticut.
On March 26, 2014, the Committee held a hearing entitled
``Reviewing the President's Fiscal Year 2015 Budget Proposal
for the Department of Labor,'' during which the Secretary of
Labor was questioned about whether the Department had plans to
regulate stop-loss insurance. The sole witness was the
Honorable Thomas E. Perez, Secretary of the U.S. Department of
Labor, Washington, D.C.
On September 4, 2014, the HELP Subcommittee held a field
hearing in Greenfield, Indiana, entitled ``The Effects of the
President's Health Care Law on Indiana's Classrooms and
Workplaces,'' during which witnesses testified about employer-
provided health coverage and self- insured plans. The witnesses
were Mr. Mike Shafer, Chief Financial Officer, Zionsville
Community Schools, Zionsville, Indiana; Mr. Tom Snyder,
President, Ivy Tech Community College, Indianapolis, Indiana;
Mr. Danny Tanoos, Superintendent, Vigo County School
Corporation, Terre Haute, Indiana; Mr. Tom Forkner, President,
Anderson Federation of Teachers, AFT Local 519, Anderson,
Indiana; Mr. Mark DeFabis, President and Chief Executive
Officer, Integrated Distribution Services, Plainfield, Indiana;
Mr. Nate LaMar, International Regional Manager, Draper, Inc.,
Spiceland, Indiana; Mr. Dan Wolfe, Owner, Wolfe's Auto Auction,
Terre Haute, Indiana; and Mr. Robert Stone, Director of
Palliative Care, IU Health Bloomington Hospital, Bloomington,
Indiana.
114TH CONGRESS
First Session--Legislative Action
On March 18, 2015, Rep. David ``Phil'' Roe (R-TN), then-
Chairman of the HELP Subcommittee, introduced the Self-
Insurance Protection Act (H.R. 1423), to ensure employees and
employers could continue to have access to affordable, flexible
health care plans by having the option to self-fund those
plans.
First Session--Hearings
On March 18, 2015, the Committee held a hearing entitled
``Reviewing the President's Fiscal Year 2016 Budget Proposal
for the Department of Labor,'' during which the Secretary of
Labor was questioned about the Department's plans to regulate
stop-loss. The sole witness was the Honorable Thomas E. Perez,
Secretary of the U.S. Department of Labor, Washington, D.C.
On April 14, 2015, the HELP Subcommittee held a hearing
entitled ``Five Years of Broken Promises: How the President's
Health Care Law is Affecting America's Workplaces,'' which
examined the continuing negative impact of the ACA on employer-
sponsored health coverage, including on self-insured plans.
Witnesses were the Honorable Tevi Troy, President, American
Health Policy Institute, Washington, D.C.; Mr. Rutland Paal,
Jr., President, Rutland Beard Floral Group, Scotch Plains, New
Jersey; Michael Brev, President, Brev Corp. t/a Hobby Works,
WingTOTE Manufacturing, LLC, Laurel, Maryland; and Ms. Sally
Roberts, Human Resources Director, Morris Communications
Company, LLC, Augusta, Georgia.
Second Session--Hearings
On March 15, 2016, the Committee held a hearing entitled
``Examining the Policies and Priorities of the U.S. Department
of Health and Human Services,'' during which self-insured plans
were discussed. The sole witness at the hearing was the
Honorable Sylvia Mathews Burwell, Secretary of the U.S.
Department of Health and Human Services, Washington, D.C.
On April 14, 2016, the HELP Subcommittee held a hearing
entitled ``Innovations in Health Care: Exploring Free-Market
Solutions for a Healthy Workforce,'' which examined, among
other things, the benefits of self-insuring. Witnesses before
the subcommittee were Ms. Sabrina Corlette, Senior Research
Professor, Center on Health Insurance Reforms, Georgetown
University's Health Policy Institute, Washington, D.C.; Ms.
Tresia Franklin, Director, Total Rewards and Employee
Relations, Hallmark Cards, Inc. Kansas City, Missouri; Ms. Amy
McDonough, Vice President and General Manager of Corporate
Wellness, Fitbit, San Francisco, California; and Mr. John Zern,
Executive Vice President and Global Health Leader, Aon,
Chicago, Illinois.
115TH CONGRESS
First Session--Hearings
On February 1, 2017, the Committee held a hearing entitled
``Rescuing Americans from the Failed Health Care Law and
Advancing Patient-Centered Solutions,'' which examined failures
of the ACA, including its effects on self-insurance. Witnesses
were Mr. Scott Bollenbacher, CPA, Managing Partner,
Bollenbacher and Associates, LLC, Portland, Indiana; Mr. Joe
Eddy, President and Chief Executive Officer, Eagle
Manufacturing Company, Wellsburg, West Virginia; Ms. Angela
Schlaack, St. Joseph, Michigan; and Dr. Tevi Troy, Chief
Executive Officer, American Health Policy Institute,
Washington, D.C.
On March 1, 2017, the Committee held a hearing entitled
``Legislative Proposals to Improve Health Care Coverage and
Provide Lower Costs for Families,'' which examined H.R. the
Self-Insurance Protection Act (H.R. 1304), among other
proposals. Witnesses were Mr. Jon B. Hurst, President,
Retailers Association of Massachusetts, Boston, Massachusetts;
Ms. Allison R. Klausner, Principal, Government Relations
Leader, Conduent, Secaucus, New Jersey; Ms. Lydia Mitts,
Associate Director of Affordability Initiatives, Families USA,
Washington, D.C.; and Mr. Jay Ritchie, Executive Vice
President, Tokio Marine HHC, Kennesaw, Georgia.
Legislative Action
On March 2, 2017, Rep. Roe introduced the Self-Insurance
Protection Act (H.R. 1304) along with then-HELP Subcommittee
Chairman Tim Walberg (R-MI) to ensure self-funding remains an
option for employee and employers offering health care
coverage.
On March 8, 2017, the Committee considered the Self-
Insurance Protection Act (H.R. 1304). Rep. Roe offered an
amendment in the nature of a substitute, making a technical
change to the introduced bill. The Committee voted to adopt the
amendment in the nature of a substitute by voice vote. Rep.
Jared Polis (D-CO) offered an amendment that was ruled non-
germane, and the ruling of the Chair was upheld by a vote of 22
to 17 on a motion to table the appeal of the ruling of the
Chair. Rep. Bonamici (D-OR) offered a clarifying amendment to
ensure that the legislation would not be construed to restrict
the ability of states to regulate stop-loss policies. H.R. 1304
does not preempt states from regulating stop-loss coverage. At
the request of Ranking Member Robert C. ``Bobby'' Scott (D-VA),
Committee Chairwoman Virginia Foxx (R-NC) agreed to include
such clarifying language in the Committee report. This
clarification ensures that nothing in the bill is erroneously
construed to restrict states' ability to regulate stop-loss
policies. Based on the understanding between Chairwoman Foxx
and Ranking Member Scott that this clarification would be
included in the Committee's official report, Rep. Bonamici
withdrew her amendment. The Committee favorably reported H.R.
1304, as amended, to the House of Representatives by voice
vote.
On April 5, 2017, the House of Representatives passed H.R.
1304, the Self-Insurance Protection Act by a vote of 400-16.
118TH CONGRESS
First Session--Hearing
On April 24, 2023, the HELP Subcommittee held a hearing
entitled ``Reducing Health Care Costs for Working Americans and
Their Families,'' which examined the Self-Insurance Protection
Act (H.R. 2813), among other proposals. Witnesses were Mr. Joel
White, President, Council for Affordable Health Coverage
(CAHC), Washington, D.C.; Mrs. Tracy Watts, Senior Partner,
Mercer, Washington, D.C.; Ms. Marcie Strouse, Partner, Capitol
Benefits Group, Des Moines, Iowa; and Ms. Sabrina Corlette,
J.D., Senior Research Professor, Center on Health Insurance
Reforms, Georgetown University's Health Policy Institute,
Washington, D.C.
Legislative Action
On April 25, 2023, HELP Subcommittee Chairman Bob Good (R-
VA) introduced the Self-Insurance Protection Act (H.R. 2813)
along with Rep. Tim Walberg (R-MI) to ensure self-funding
remains an option for employee and employers offering health
care coverage. The bill was referred to the Committee on
Education and the Workforce, the Committee on Energy and
Commerce, and the Committee on Ways and Means. On June 6, 2023,
the Committee considered H.R. 2813 in legislative session and
reported it favorably, as amended, to the House of
Representatives by a recorded vote of 24-18. The Committee
adopted the following amendment to H.R. 2813: Rep. Good offered
an Amendment in the Nature of a Substitute (ANS) that, with
respect to the language amending ERISA, strikes duplicate
language amending the Public Health Service Act and the
Internal Revenue Code. The ANS also changes the term ``self-
funded health plan'' to ``self-insured group health plan.''
Committee Views
INTRODUCTION
Background on employer-sponsored insurance coverage
Since World War II, employers have offered health care
benefits to recruit and retain talent and to ensure a healthy
and productive workforce. Employer-sponsored health insurance
is one of the primary means by which Americans obtain health
care coverage. Almost 159 million American workers and family
members are covered by a health benefit plan offered by an
employer.\2\ The U.S. Census Bureau reports that 54.3 percent
of Americans were covered by employment-based health coverage
in 2021.\3\ When given the option for employment-based health
coverage, 77 percent of workers take up coverage.\4\ Almost all
businesses with at least 200 or more employees offer health
benefits.\5\ According to the Kaiser Family Foundation,
however, smaller firms (with 3 to 199 employees) are
significantly less likely to offer health benefits.\6\ As a
result, in 2022, just over half of all employers offered some
health benefits.\7\
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\2\Kaiser Family Found., Employer Health Benefits: 2022 Annual
Survey, 2022 Employer Health Benefits Survey 58, http://files.kff.org/
attachment/Report-Employer-Health-Benefits-2022-Annual-Survey.pdf.
\3\U.S. Census Bur., U.S. Dep't of Com., Health Insurance Coverage
in the United States: 2021, http://census.gov/content/dam/Census/
library/publications/2022/demo/p60-278.pdf.
\4\Kaiser Family Found., supra note 2, Summary of Findings, 12.
\5\Id.
\6\Id.
\7\Id.
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Employer-provided health benefits are regulated by a number
of laws, including ERISA as amended by the ACA. The Department
of Labor (DOL) implements and enforces ERISA. By virtue of its
jurisdiction over ERISA, the Committee has jurisdiction over
employer-provided health coverage.
Self-insured health plans
Small and large employers offer health care coverage to
employees in self-funded arrangements (self-insurance) or
purchase fully insured plans. ERISA regulates both fully
insured and self-insured plans, but only self-insured plans are
exempt from a patchwork of benefit mandates and regulations
imposed under state insurance law. Employers sponsoring self-
insured plans are not subject to the same requirements under
ACA as those with fully-insured plans. Therefore, employer-
provided plans have different requirements and costs depending
on funding arrangements. Last year, approximately 65 percent of
workers with employer-sponsored health coverage were enrolled
in a self-funded plan, up from 44 percent in 1999 and 55
percent in 2007.\8\
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\8\Id. Fig. 10.2, at 157.
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An employer can provide health insurance to employees
either by fully insuring or self- insuring. An employer who is
fully insured enters into a contractual agreement with a health
insurer to purchase a product for the employer's employees. The
employer and employees pay a fixed, monthly premium to the
insurance company. This arrangement is what many consider
``traditional'' insurance. An employer that self-funds provides
for employees' medical costs by paying providers directly or
reimbursing employees as claims arise, instead of paying a
fixed premium to an insurance company. Although self-insured
employers are responsible for employees' health care expenses,
they may customize the design of their health plans to meet the
specific needs of their workforce and can retain savings in
years with low claims.
A self-insured employer may administer health claims in-
house or subcontract the administrative services to a third
party administrator (TPA).\9\ The employer or TPA coordinates
provider network contracts\10\ and stop-loss insurance for
unexpected high claims.\11\ By making a conscious choice to
bear the financial risk of an employee's health care expenses,
employers can experience cost savings that are not available
from a coverage purchased in the fully insured market. In 2017,
Mr. Jay Richie, Executive Vice President, Tokio Marino HCC
Stop-Loss Group, testifying before the Committee on behalf of
the Self-Insurance Institute of America, Inc., discussed the
value of self-funding:
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\9\Self-Insurance Inst. of America, Inc., Self-Insured Group Health
Plans, http://www.siaa.org/i4a/pages/inde.cfm?pageid=7533.
\10\ Id.
\11\Self-Insurance Inst. of America, Inc., Stop-Loss Excess
Insurance, https://www.siia.org/i4a/pages/index.cfm?pageid=7535.
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If you're a health insurer, you're going to take the
increasing cost of medical insurance and, due to our
new medical loss ratio law, get a profit percentage on
the rising increase of that cost. So, you take it into
a self-insured model, and you're not paying the health
insurer's profits on top of your rising costs. That's
the value of self-insurance. You're taking it and
controlling your own destination, and keeping it at a
true costs basis.\12\
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\12\Legislative Proposals to Improve Health Care Coverage and
Provide Lower Costs for Families: Hearing Before the H. Comm. on Educ.
& the Workforce, 115th Cong. 83 (2017) (testimony of Jay Ritchie, Exec.
Vice President, Tokio Marine HHC).
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According to Kaiser Family Foundation, 65 percent of
employees with employer-sponsored health coverage receive that
coverage through a self-insured plan.\13\ The more employees an
employer has, the more likely that employer is to self-insure.
Kaiser reports that 20 percent of covered employees at small
firms (3 to 199 employees) are covered through a self-insured
plan, while 82 percent of employees at large firms are covered
through a self-insured plan.\14\ Small businesses are less
likely to self-insure because unlike their larger counterparts,
they have fewer employees to spread the risk\15\ and often
smaller margins to pay the claims. A combination arrangement of
self-funded insurance combined with significant stop-loss
coverage (called ``level-funded arrangements'') has evolved in
recent years to mitigate a small business' risk for self-
funding.\16\
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\13\ Kaiser Family Found., supra note 2, at 156.
\14\ Id.
\15\ Id. (``Self-funding is common among larger firms because they
can spread risk of costly claims over a larger number of workers and
dependents.'')
\16\ Id.
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Many employers choose to self-insure because they can
customize their plans to their workforce. For example, self-
insured plans are not required to cover all categories of
essential health benefits mandated by the ACA, so employers can
structure their plans to meet the specific needs of their
employees. The Self-Insurance Institute of America lists the
following advantages of self-insured health plans:
1. The employer can customize the plan to meet the
specific health needs of its workforce, as opposed to
purchasing a `one-size-fits- all' insurance policy.
2. The employer maintains control over the health
plan reserves, enabling maximization of interest
income--income that would be otherwise generated by an
insurance carrier through the investment of premium
dollars.
3. The employer does not have to pre-pay for
coverage, thereby improving case flow.
4. The employer is not subject to conflicting state
health insurance regulations/benefit mandates,
[because] self-insured health plans are regulated under
federal law (ERISA).
5. The employer is not subject to state health
insurance premium taxes which are generally 2-3 percent
of the premium's dollar value.
6. The employer is free to contract with the
providers or provider network best suited to meet the
health care needs of its employees.\17\
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\17\Self-Insurance Inst. of America, Inc., Self-Insured Group
Health Plans, http://www.siaa.org/i4a/pages/inde.cfm?pageid=7533.
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Self-insurance is also attractive to employers due to the
long-term financial savings it may provide. Mr. Joel White,
President of the Council for Affordable Health Coverage,
explained that self-funding is a tool for small businesses ``to
better manage costs and innovate benefits.''\18\ In 2017, Mr.
Jay Ritchie, Executive Vice President, Tokio Marino HCC Stop-
Loss Group, explained why self-insurance may provide long-term
financial savings when he stated
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\18\Reducing Health Care Costs for Working Americans and Their
Families: Hearing Before the H. Subcomm. on Health, Emp., Lab., &
Pensions of the H. Comm. on Educ. & the Workforce, 118th Cong. (2023)
(statement of Joel White, President, Council for Affordable Health
Coverage).
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[O]ver a three- to five-year period, we see that
self-insurance is generally cheaper than health
insurance. Now, on a year-to-year basis, that may be
very different because the health insurance is
prospectively priced where the self-insurance is
actually priced. Whatever you actually spend that year
is your cost, where for health insurance, they're
predicting that.''\19\
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\19\Legislative Proposals to Improve Health Care Coverage and
Provide Lower Costs for Families: Hearing Before the H. Comm on Educ. &
the Workforce, 115th Cong. 110 (2017) (testimony of Jay Ritchie, Exec.
Vice President, Tokio Marine HCC).
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Stop Loss Insurance
Many self-insured employers also purchase stop-loss
insurance, a financial risk- management tool designed to
protect against catastrophic claims expenses. Stop-loss
insurance reimburses a self-insured plan sponsor for medical
claims that exceed a certain pre-established level of
liability; it does not insure employees, nor does it reimburse
medical providers for care. As Mr. Ritchie stated in his
testimony before the Committee in 2017, ``stop-loss does not
insure employees nor do we reimburse medical providers for
care, but rather stop-loss reimburses a self- insured entity
for health care payments they have made that exceed a certain,
pre-determined level similar to a liability product.''\20\
---------------------------------------------------------------------------
\20\Id. at 41 (statement of Jay Ritchie, Exec. Vice President,
Tokio Marine HCC).
---------------------------------------------------------------------------
The point at which the stop-loss carrier begins to pay its
obligations for stop-loss insurance is called the ``attachment
point.''\21\ There are two types of stop-loss insurance:
``specific'' and ``aggregate.'' Specific stop-loss insurance
protects against a high claim of a single employee (or
dependent).\22\ Aggregate stop-loss insurance limits the total
amount a self-insured employer must pay for all claims during a
certain period.\23\ Stop-loss insurance may also be purchased
for certain types of claims.\24\ An employer could purchase
more than one type of stop-loss coverage.\25\ Kaiser reports
that over the last few years, the percentage of employees in
self-insured plans that have stop-loss insurance in 2022 is
about the same for small firms (73 percent) and large firms (72
percent).\26\
---------------------------------------------------------------------------
\21\Kaiser Family Found., supra note 2, at 163.
\22\Id. at 161.
\23\Id.
\24\Id.
\25\Id.
\26\Id. at 162. For these purposes, a small firm is 50 to 199
employees, and a large firm is 200 or more employees.
---------------------------------------------------------------------------
A combination arrangement of self-funded insurance combined
with significant stop loss coverage (called ``level-funded
arrangements'') has evolved in recent years to mitigate a small
business' risk for self-insuring.\27\ According to Mr. White's
testimony in 2023, level-funded plans have three parts:
administration (processing of claims and estimating premiums);
claims costs (payment of actual employee medical expenses); and
stop-loss (insurance coverage for excess losses). His testimony
detailed the use of level-funding arrangements as a tool to
allow small businesses flexibly to design their plans under the
self-insured rules and to reduce risk with stop- loss
coverage.\28\
---------------------------------------------------------------------------
\27\Id. at 156.
\28\White statement, supra note 20.
---------------------------------------------------------------------------
Stop-loss insurance is sometimes regulated at the state
level but not at the federal level. However, the Obama
administration repeatedly signaled interest in regulating stop-
loss insurance as health insurance. In 2014, DOL posted
guidance on state regulation of stop-loss insurance\29\ stating
its position that a state law would not be preempted by ERISA.
In response to DOL's guidance, then-Chairman of the HELP
Subcommittee Phil Roe (R-TN) introduced H.R. 1304 (115th
Congress), the Self-Insurance Protection Act, which passed the
House on suspension by a vote of 400-16.
---------------------------------------------------------------------------
\29\DOL, Technical Release No. 2014-01: Guidance on State
Regulation of Stop-Loss Insurance (Nov. 6, 2014), https://dol.gov/node/
63762.
---------------------------------------------------------------------------
Mr. White testified that some states have started to limit
small employers' ability to maintain self-funded group health
coverage for employees.\30\ Even though states may not directly
regulate self-funded plans established under ERISA, ``some
states have effectively eliminated small employer access [to
self-funded coverage] by banning the sale of level-funded plans
to certain size groups or making the sale of low attachment
point plans illegal.''\31\ Mr. White recommended that Congress
clarify that ERISA preempts state laws which adversely impact
the ability of small businesses to maintain self-funded
arrangements, including the ability to coordinate stop-loss
coverage that is paired with a self-funded arrangement.\32\
---------------------------------------------------------------------------
\30\White statement, supra note 20.
\31\Id.
\32\Id.
---------------------------------------------------------------------------
Stop-loss coverage is not and should not be defined as
health insurance coverage under ERISA, the PHSA, or the Code.
Stop-loss insurance differs from health insurance in that it
does not insure employees or reimburse medical providers for
care.
Support for creating options and flexibility for small businesses
The Council for Affordable Health Coverage, the Self-
Insurance Institute of America, Inc., the Partnership for
Employer-Sponsored Coverage, the U.S. Chamber of Commerce, the
Associated General Contractors of America, the MLD Foundation,
Main Street Freedom Alliance, National Association of
Wholesaler-Distributors, National Federation of Independent
Business, Small Business & Entrepreneurship Council, and the
Coalition to Protect and Promote Association Health Plans
support H.R. 2813 because it protects a funding mechanism
option that businesses should be permitted to consider when
offering a self-insured health plan to their employees.
Moreover, the legislation ensures that thousands of employers--
large and small--who currently self-insure their health plans
will be able to continue providing affordable benefits that
best meet the needs of workers and their families.
H.R. 2813, THE SELF INSURANCE PROTECTION ACT
H.R. 2813, the Self-Insurance Protection Act, amends ERISA
to clarify that federal regulators cannot redefine stop-loss
insurance as traditional health insurance in order to preserve
the option of self-funding. The bill also prohibits states from
regulating stop-loss insurance if state laws or regulations
would make stop-loss insurance inaccessible to employers. By
providing legal certainty, the bill will help ensure workers
and families continue to have access to affordable, flexible
self-insured health plans.
CONCLUSION
H.R. 2813, the Self-Insurance Protection Act, makes it
easier for small businesses to promote a healthy workforce and
offer more affordable health care coverage. By allowing small
businesses to sponsor self-insured health coverage for their
employees while mitigating financial risk for the employer
through stop-loss insurance, the bill puts smaller businesses
on a more level playing field with larger companies and unions.
More importantly, it provides smaller employers-- many of whom
have limited resources--with a greater opportunity to offer
their workers quality and affordable health care coverage. If
enacted, H.R. 2813 will empower small businesses to provide
quality health care for their employees.
Summary
H.R. 2813 SECTION BY SECTION
Section 1. Short title
Section 1 provides that the short title is ``Self-Insurance
Protection Act.''
Section 2. Findings
Section provides the following findings by Congress:
(1) Small and large employers offer health benefits
plan coverage to employees in self-funded arrangements
using company assets or a fund, or by paying premiums
to purchase fully insured coverage from a health
insurance company.
(2) Employers that self-fund health benefit plans
will often purchase stop-loss insurance as a financial
risk-management tool to protect against excess or
unexpected catastrophic health plan claims losses that
arise above projected costs paid out of company assets.
(3) Stop-loss coverage insures the employer
sponsoring the health benefit plan against unforseen
health plan claims, does not insure the employee health
benefit plan itself, and does not pay health care
providers for medical services provided to the
employees.
(4) Employer-sponsored health benefit plans are
regulated under the Employee Retirement Income Security
Act of 1974; however, States regulate the availability
and the coverage terms of stop-loss insurance coverage
that employers purchase to protect company assets and
to protect a fund against excess or unexpected claims
losses.
(5) Both large and small employers that choose to
self-fund must also be able to protect company assets
or a fund against excess or unexpected claims losses
and States must reasonably regulate stop-loss insurance
to assure its availability to both large and small
employers.
Section 3. Certain medical stop-loss insurance obtained by certain plan
sponsors of group health plans not included in the definition
of health insurance coverage
Section 3(a) amends Subpart C, Part 7, Subtitle B, of Title
I of ERISA by adding a new sentence at the end of Section
733(b)(1): ``Such term shall not include a stop-loss policy
obtained by a self-funded health plan or a plan sponsor of a
group health plan that self-funds the health risks of its plan
participants to reimburse the plan or sponsor for losses that
the plan or sponsor incurs in providing health or medical
benefits to such plan participants in excess of a predetermined
level set forth in the stop-loss policy obtained by such plan
or sponsor.'' This provision is to clarify that federal
regulators cannot re-define stop loss insurance as traditional
health insurance, thereby ensuring that employers can continue
to use stop-loss insurance as an important financial tool to
help provide health care coverage.
Section 4. Effect on other laws
Section 4 amends Part 5, Subtitle B of Title I of ERISA by
adding a subsection (10) at the end of Section 514(b))
providing that Title I of ERISA (including part 7 relating to
group health plans) preempts state laws that may prevent a
group health plan from insuring against the risk of excess or
unexpected health plan claims or losses. This provision renders
ineffective any state law that may make stop-loss insurance
inaccessible to employers.
Explanation of Amendments
The amendments, including the amendment in the nature of a
substitute, are explained in the body of this report.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch. H.R. 2813 takes important steps to preserve and expand
access to affordable, high-quality health care coverage for
small employers by ensuring that employers may continue to use
stop-loss insurance as an important tool in providing employees
with self-insured health coverage.
Unfunded Mandate Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandates Reform Act, P.L. 104-4) requires a statement of
whether the provisions of the reported bill include unfunded
mandates. This issue is addressed in the CBO letter.
Earmark Statement
H.R. 2813 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of House rule XXI.
Roll Call Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee Report to include for
each record vote on a motion to report the measure or matter
and on any amendments offered to the measure or matter the
total number of votes for and against and the names of the
Members voting for and against.
Statement of General Performance Goals and Objectives
In accordance with clause (3)(c) of House rule XIII, the
goal of H.R. 2813 is to preserve and expand access to
affordable, high-quality health care coverage for small
employers by ensuring that employers may continue to use stop-
loss insurance as an important tool in providing employees with
self-insured health coverage.
Duplication of Federal Programs
No provision of H.R. 2813 establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Statement of Oversight Findings and Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
2(b)(1) of rule X of the Rules of the House of Representatives,
the committee's oversight findings and recommendations are
reflected in the body of this report.
Required Committee Hearing and Related Hearings
In compliance with clause 3(c)(6) of rule XIII, the
following hearing held during the 118th Congress was used to
develop or consider H.R. 2813: On April 24, 2023, the HELP
Subcommittee held a hearing entitled ``Reducing Health Care
Costs for Working Americans and Their Families.''
New Budget Authority and CBO Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause 3(c)(3) of rule XIII of the Rules of
the House of Representatives and section 402 of the
Congressional Budget Act of 1974, a cost estimate was not made
available to the Committee in time for the filing of this
report. The Chairwoman of the Committee shall cause such
estimate to be printed in the Congressional Record upon its
receipt by the Committee.
Committee Cost Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison of the
costs that would be incurred in carrying out H.R. 2813.
However, clause 3(d)(2)(B) of that rule provides that this
requirement does not apply when, as with the present report,
the committee adopts as its own the cost estimate of the bill
prepared by the Director of the Congressional Budget Office
under section 402 of the Congressional Budget Act.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italics and existing law in which no change is
proposed is shown in roman):
EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974
* * * * * * *
TITLE I--PROTECTION OF EMPLOYEE BENEFIT RIGHTS
* * * * * * *
Subtitle B--Regulatory Provisions
* * * * * * *
Part 5--Administration and Enforcement
* * * * * * *
EFFECT ON OTHER LAWS
Sec. 514. (a) Except as provided in subsection (b) of this
section, the provisions of this title and title IV shall
supersede any and all State laws insofar as they may now or
hereafter relate to any employee benefit plan described in
section 4(a) and not exempt under section 4(b). This section
shall take effect on January 1, 1975.
(b)(1) This section shall not apply with respect to any cause
of action which arose, or any act or omission which occurred,
before January 1, 1975.
(2)(A) Except as provided in subparagraph (B), nothing in
this title shall be construed to exempt or relieve any person
from any law of any State which regulates insurance, banking,
or securities.
(B) Neither an employee benefit plan described in section
4(a), which is not exempt under section 4(b) (other than a plan
established primarily for the purpose of providing death
benefits), nor any trust established under such a plan, shall
be deemed to be an insurance company or other insurer, bank,
trust company, or investment company or to be engaged in the
business of insurance or banking for purposes of any law of any
State purporting to regulate insurance companies, insurance
contracts, banks, trust companies, or investment companies.
(3) Nothing in this section shall be construed to prohibit
use by the Secretary of services or facilities of a State
agency as permitted under section 506 of this Act.
(4) Subsection (a) shall not apply to any generally
applicable criminal law of a State.
(5)(A) Except as provided in subparagraph (B), subsection (a)
shall not apply to the Hawaii Prepaid Health Care Act (Haw.
Rev. Stat. Sec. Sec. 393-1 through 393-51).
(B) Nothing in subparagraph (A) shall be construed to exempt
from subsection (a)--
(i) any State tax law relating to employee benefit
plans, or
(ii) any amendment of the Hawaii Prepaid Health Care
Act enacted after September 2, 1974, to the extent it
provides for more than the effective administration of
such Act as in effect on such date.
(C) Notwithstanding subparagraph (A), parts 1 and 4 of this
subtitle, and the preceding sections of this part to the extent
they govern matters which are governed by the provisions of
such parts 1 and 4, shall supersede the Hawaii Prepaid Health
Care Act (as in effect on or after the date of the enactment of
this paragraph ), but the Secretary may enter into cooperative
arrangements under this paragraph and section 506 with
officials of the State of Hawaii to assist them in effectuating
the policies of provisions of such Act which are superseded by
such parts 1 and 4 and the preceding sections of this part.
(6)(A) Notwithstanding any other provision of this section--
(i) in the case of an employee welfare benefit plan
which is a multiple employer welfare arrangement and is
fully insured (or which is a multiple employer welfare
arrangement subject to an exemption under subparagraph
(B)), any law of any State which regulates insurance
may apply to such arrangement to the extent that such
law provides--
(I) standards, requiring the maintenance of
specified levels of reserves and specified
levels of contributions, which any such plan,
or any trust established under such a plan,
must meet in order to be considered under such
law able to pay benefits in full when due, and
(II) provisions to enforce such standards,
and
(ii) in the case of any other employee welfare
benefit plan which is a multiple employer welfare
arrangement, in addition to this title, any law of any
State which regulates insurance may apply to the extent
not inconsistent with the preceding sections of this
title.
(B) The Secretary may, under regulations which may be
prescribed by the Secretary, exempt from subparagraph (A)(ii),
individually or by class, multiple employer welfare
arrangements which are not fully insured. Any such exemption
may be granted with respect to any arrangement or class of
arrangements only if such arrangement or each arrangement which
is a member of such class meets the requirements of section
3(1) and section 4 necessary to be considered an employee
welfare benefit plan to which this title applies.
(C) Nothing in subparagraph (A) shall affect the manner or
extent to which the provisions of this title apply to an
employee welfare benefit plan which is not a multiple employer
welfare arrangement and which is a plan, fund, or program
participating in, subscribing to, or otherwise using a multiple
employer welfare arrangement to fund or administer benefits to
such plan's participants and beneficiaries.
(D) For purposes of this paragraph, a multiple employer
welfare arrangement shall be considered fully insured only if
the terms of the arrangement provide for benefits the amount of
all of which the Secretary determines are guaranteed under a
contract, or policy of insurance, issued by an insurance
company, insurance service, or insurance organization,
qualified to conduct business in a State.
(7) Subsection (a) shall not apply to qualified domestic
relations orders (within the meaning of section
206(d)(3)(B)(i)), qualified medical child support orders
(within the meaning of section 609(a)(2)(A)), and the
provisions of law referred to in section 609(a)(2)(B)(ii) to
the extent they apply to qualified medical child support
orders.
(8) Subsection (a) of this section shall not be construed to
preclude any State cause of action--
(A) with respect to which the State exercises its
acquired rights under section 609(b)(3) with respect to
a group health plan (as defined in section 607(1)), or
(B) for recoupment of payment with respect to items
or services pursuant to a State plan for medical
assistance approved under title XIX of the Social
Security Act which would not have been payable if such
acquired rights had been executed before payment with
respect to such items or services by the group health
plan.
(9) For additional provisions relating to group health plans,
see section 731.
(10) The provisions of this title (including part 7 relating
to group health plans) shall preempt State laws insofar as they
may now or hereafter prevent an employee benefit plan that is a
group health plan from insuring against the risk of excess or
unexpected health plan claims losses.
(c) For purposes of this section:
(1) The term ``State law'' includes all laws,
decisions, rules, regulations, or other State action
having the effect of law, of any State. A law of the
United States applicable only to the District of
Columbia shall be treated as a State law rather than a
law of the United States.
(2) The term ``State'' includes a State, any
political subdivisions thereof, or any agency or
instrumentality of either, which purports to regulate,
directly or indirectly, the terms and conditions of
employee benefit plans covered by this title.
(d) Nothing in this title shall be construed to alter, amend,
modify, invalidate, impair, or supersede any law of the United
States (except as provided in sections 111 and 507(b)) or any
rule or regulation issued under any such law.
(e)(1) Notwithstanding any other provision of this section,
this title shall supersede any law of a State which would
directly or indirectly prohibit or restrict the inclusion in
any plan of an automatic contribution arrangement. The
Secretary may prescribe regulations which would establish
minimum standards that such an arrangement would be required to
satisfy in order for this subsection to apply in the case of
such arrangement.
(2) For purposes of this subsection, the term ``automatic
contribution arrangement'' means an arrangement--
(A) under which a participant may elect to have the
plan sponsor make payments as contributions under the
plan on behalf of the participant, or to the
participant directly in cash,
(B) under which a participant is treated as having
elected to have the plan sponsor make such
contributions in an amount equal to a uniform
percentage of compensation provided under the plan
until the participant specifically elects not to have
such contributions made (or specifically elects to have
such contributions made at a different percentage), and
(C) under which such contributions are invested in
accordance with regulations prescribed by the Secretary
under section 404(c)(5).
(3)(A) The plan administrator of an automatic contribution
arrangement shall, within a reasonable period before such plan
year, provide to each participant to whom the arrangement
applies for such plan year notice of the participant's rights
and obligations under the arrangement which--
(i) is sufficiently accurate and comprehensive to
apprise the participant of such rights and obligations,
and
(ii) is written in a manner calculated to be
understood by the average participant to whom the
arrangement applies.
(B) A notice shall not be treated as meeting the requirements
of subparagraph (A) with respect to a participant unless--
(i) the notice includes an explanation of the
participant's right under the arrangement not to have
elective contributions made on the participant's behalf
(or to elect to have such contributions made at a
different percentage),
(ii) the participant has a reasonable period of time,
after receipt of the notice described in clause (i) and
before the first elective contribution is made, to make
such election, and
(iii) the notice explains how contributions made
under the arrangement will be invested in the absence
of any investment election by the participant.
* * * * * * *
Part 7--Group Health Plan Requirements
* * * * * * *
Subpart C--General Provisions
* * * * * * *
SEC. 733. DEFINITIONS.
(a) Group Health Plan.--For purposes of this part--
(1) In general.--The term ``group health plan'' means
an employee welfare benefit plan to the extent that the
plan provides medical care (as defined in paragraph (2)
and including items and services paid for as medical
care) to employees or their dependents (as defined
under the terms of the plan) directly or through
insurance, reimbursement, or otherwise. Such term shall
not include any qualified small employer health
reimbursement arrangement (as defined in section
9831(d)(2) of the Internal Revenue Code of 1986).
(2) Medical care.--The term ``medical care'' means
amounts paid for--
(A) the diagnosis, cure, mitigation,
treatment, or prevention of disease, or amounts
paid for the purpose of affecting any structure
or function of the body,
(B) amounts paid for transportation primarily
for and essential to medical care referred to
in subparagraph (A), and
(C) amounts paid for insurance covering
medical care referred to in subparagraphs (A)
and (B).
(b) Definitions Relating to Health Insurance.--For purposes
of this part--
(1) Health insurance coverage.--The term ``health
insurance coverage'' means benefits consisting of
medical care (provided directly, through insurance or
reimbursement, or otherwise and including items and
services paid for as medical care) under any hospital
or medical service policy or certificate, hospital or
medical service plan contract, or health maintenance
organization contract offered by a health insurance
issuer. Such term shall not include a stop-loss policy
obtained by a self-insured group health plan or a plan
sponsor of a group health plan that self-insures the
health risks of its plan participants to reimburse the
plan or sponsor for losses that the plan or sponsor
incurs in providing health or medical benefits to such
plan participants in excess of a predetermined level
set forth in the stop-loss policy obtained by such plan
or sponsor.
(2) Health insurance issuer.--The term ``health
insurance issuer'' means an insurance company,
insurance service, or insurance organization (including
a health maintenance organization, as defined in
paragraph (3)) which is licensed to engage in the
business of insurance in a State and which is subject
to State law which regulates insurance (within the
meaning of section 514(b)(2)). Such term does not
include a group health plan.
(3) Health maintenance organization.--The term
``health maintenance organization'' means--
(A) a federally qualified health maintenance
organization (as defined in section 1301(a) of
the Public Health Service Act (42 U.S.C.
300e(a))),
(B) an organization recognized under State
law as a health maintenance organization, or
(C) a similar organization regulated under
State law for solvency in the same manner and
to the same extent as such a health maintenance
organization.
(4) Group health insurance coverage.--The term
``group health insurance coverage'' means, in
connection with a group health plan, health insurance
coverage offered in connection with such plan.
(c) Excepted Benefits.--For purposes of this part, the term
``excepted benefits'' means benefits under one or more (or any
combination thereof) of the following:
(1) Benefits not subject to requirements.--
(A) Coverage only for accident, or disability
income insurance, or any combination thereof.
(B) Coverage issued as a supplement to
liability insurance.
(C) Liability insurance, including general
liability insurance and automobile liability
insurance.
(D) Workers' compensation or similar
insurance.
(E) Automobile medical payment insurance.
(F) Credit-only insurance.
(G) Coverage for on-site medical clinics.
(H) Other similar insurance coverage,
specified in regulations, under which benefits
for medical care are secondary or incidental to
other insurance benefits.
(2) Benefits not subject to requirements if offered
separately.--
(A) Limited scope dental or vision benefits.
(B) Benefits for long-term care, nursing home
care, home health care, community-based care,
or any combination thereof.
(C) Such other similar, limited benefits as
are specified in regulations.
(3) Benefits not subject to requirements if offered
as independent, noncoordinated benefits.--
(A) Coverage only for a specified disease or
illness.
(B) Hospital indemnity or other fixed
indemnity insurance.
(4) Benefits not subject to requirements if offered
as separate insurance policy.--Medicare supplemental
health insurance (as defined under section 1882(g)(1)
of the Social Security Act), coverage supplemental to
the coverage provided under chapter 55 of title 10,
United States Code, and similar supplemental coverage
provided to coverage under a group health plan.
(d) Other Definitions.--For purposes of this part--
(1) COBRA continuation provision.--The term ``COBRA
continuation provision'' means any of the following:
(A) Part 6 of this subtitle.
(B) Section 4980B of the Internal Revenue
Code of 1986, other than subsection (f)(1) of
such section insofar as it relates to pediatric
vaccines.
(C) Title XXII of the Public Health Service
Act.
(2) Health status-related factor.--The term ``health
status-related factor'' means any of the factors
described in section 702(a)(1).
(3) Network plan.--The term ``network plan'' means
health insurance coverage offered by a health insurance
issuer under which the financing and delivery of
medical care (including items and services paid for as
medical care) are provided, in whole or in part,
through a defined set of providers under contract with
the issuer.
(4) Placed for adoption.--The term ``placement'', or
being ``placed'', for adoption, has the meaning given
such term in section 609(c)(3)(B).
(5) Family member.--The term ``family member'' means,
with respect to an individual--
(A) a dependent (as such term is used for
purposes of section 701(f)(2)) of such
individual, and
(B) any other individual who is a first-
degree, second-degree, third-degree, or fourth-
degree relative of such individual or of an
individual described in subparagraph (A).
(6) Genetic information.--
(A) In general.--The term ``genetic
information'' means, with respect to any
individual, information about--
(i) such individual's genetic tests,
(ii) the genetic tests of family
members of such individual, and
(iii) the manifestation of a disease
or disorder in family members of such
individual.
(B) Inclusion of genetic services and
participation in genetic research.--Such term
includes, with respect to any individual, any
request for, or receipt of, genetic services,
or participation in clinical research which
includes genetic services, by such individual
or any family member of such individual.
(C) Exclusions.--The term ``genetic
information'' shall not include information
about the sex or age of any individual.
(7) Genetic test.--
(A) In general.--The term ``genetic test''
means an analysis of human DNA, RNA,
chromosomes, proteins, or metabolites, that
detects genotypes, mutations, or chromosomal
changes.
(B) Exceptions.--The term ``genetic test''
does not mean--
(i) an analysis of proteins or
metabolites that does not detect
genotypes, mutations, or chromosomal
changes; or
(ii) an analysis of proteins or
metabolites that is directly related to
a manifested disease, disorder, or
pathological condition that could
reasonably be detected by a health care
professional with appropriate training
and expertise in the field of medicine
involved.
(8) Genetic services.--The term ``genetic services''
means--
(A) a genetic test;
(B) genetic counseling (including obtaining,
interpreting, or assessing genetic
information); or
(C) genetic education.
(9) Underwriting purposes.--The term ``underwriting
purposes'' means, with respect to any group health
plan, or health insurance coverage offered in
connection with a group health plan--
(A) rules for, or determination of,
eligibility (including enrollment and continued
eligibility) for benefits under the plan or
coverage;
(B) the computation of premium or
contribution amounts under the plan or
coverage;
(C) the application of any pre-existing
condition exclusion under the plan or coverage;
and
(D) other activities related to the creation,
renewal, or replacement of a contract of health
insurance or health benefits.
* * * * * * *
MINORITY VIEWS
Introduction
Congressional Democrats and the Biden and Obama
Administrations have made historic progress to improve the
affordability of health insurance and combating growth in the
overall cost of providing care in the United States. This has
made the system fairer for consumers and helped bring the
uninsured rate down to 8 percent--the lowest level in
history.\1\ While more work needs to be done to achieve an
affordable health care system, H.R. 2813, the Self-Insurance
Protection Act, would be counterproductive to these efforts.
---------------------------------------------------------------------------
\1\Aiden Lee et al., National Uninsured Rate Reaches All-Time Low
in Early 2022, Assistant Secretary for Planning and Evaluation, U.S.
Department of Health and Human Services (Aug. 2022), https://
aspe.hhs.gov/sites/default/files/documents/
15c1f9899b3f203887deba90e3005f5a/
Uninsured-Q1-2022-Data-Point-HP-2022-23-08.pdf.
---------------------------------------------------------------------------
Committee Democrats do not oppose the purchase of stop loss
insurance to help plan sponsors mitigate their risk when they
self-insure. However, stop loss, like any other insurance
product, must be subject to reasonable oversight and consumer
protections. Unfortunately, H.R. 2813 would prevent both the
federal government and state regulators from performing
necessary oversight and taking action to protect consumers and
small businesses. Therefore, Committee Democrats oppose H.R.
2813.
Regulatory Framework of Self-Insurance
In general, a group health plan can be funded through two
different mechanisms. The plan can either be: (1) self-insured,
where the plan sponsor is responsible for the costs of health
care claims incurred by plan participants and beneficiaries; or
(2) fully insured, where the plan sponsor shifts the financial
risk by purchasing coverage from an insurance company who is
responsible for costs incurred under the plan.\2\
---------------------------------------------------------------------------
\2\Gary Claxon et. al., 2022 Employer Health Benefits Survey,
Kaiser Family Foundation at 163 (Oct. 27, 2022), https://files.kff.org/
attachment/Report-Employer-Health-Benefits-2022-Annual-Survey.pdf.
---------------------------------------------------------------------------
Many self-insured plans purchase additional insurance
coverage known as ``stop loss,''\3\ in which an insurance
carrier bears the financial responsibility for claims that are
incurred above a certain threshold (known as the ``attachment
point'').\4\ Although states generally have authority to
regulate insurers offering coverage in the group market (as
well as the individual market), self-insured group health plans
are generally exempt from state regulation due to the broad
preemption provision of the Employee Retirement Income Security
Act (ERISA).\5\
---------------------------------------------------------------------------
\3\Both ``stop loss'' and ``stop-loss'' are used interchangeably.
\4\Claxon at al., supra note 2 at 160.
\5\29 U.S.C. Sec. 1144(a).
---------------------------------------------------------------------------
Federal law does not generally apply any substantive
standards to stop loss insurance, as this market is
traditionally within the purview of state insurance regulators.
However, stop loss issuers may be subject to certain ERISA
requirements as group health plan service providers.\6\ In
addition, ERISA, the Public Health Service Act (PHSA) and the
Internal Revenue Code (IRC) provide authority to the
Departments of Labor, Health and Human Services, and the
Treasury, respectively, to interpret and enforce requirements
applicable to group health plans and issuers offering health
insurance coverage in connection with a group health plan.\7\
---------------------------------------------------------------------------
\6\29 U.S.C. Sec. Sec. 1106, 1108(b)(2).
\7\Health Insurance Portability and Accountability Act of 1996,
Pub. L. No. 104-91 Sec. 104.
---------------------------------------------------------------------------
Stop Loss as a Potential Workaround From ACA Consumer Protections
While stop loss insurance, when used for its intended
purpose, can provide appropriate financial protection for self-
funded employers against large losses, experts have
increasingly observed that it is often used as a tool to evade
regulatory and statutory requirements. Specifically, there has
been a marked growth in the number of so-called ``level-
funded'' group health plans, in which plan sponsors--generally
small employers--purchase stop loss coverage with extremely low
attachment points that essentially insulate the sponsor from
meaningful financial responsibility for claims.\8\ This allows
the plan to operate as a de facto fully insured plan, in which
the plan sponsor is only responsible for making fixed payments
to the insurer. However, because the plan is legally considered
self-insured, ERISA preempts state laws that seek to regulate
the plan, and certain requirements of the Affordable Care Act
(ACA)\9\ do not apply.\10\ As a result, the plan is effectively
exempt from key consumer protections, most notably the
requirement to provide all ten Essential Health Benefits under
the ACA.\11\
---------------------------------------------------------------------------
\8\Claxton et al., supra note 2 at 156. See also Christen Linke
Young, Taking a Broader View of ``Junk Insurance,'' Brookings
Institution at 16-17 (July 6, 2020), https://www.brookings.edu/wp-
content/uploads/2020/07/Broader-View_July_2020.pdf.
\9\Pub. L. No. 111-148 (2010).
\10\Young, supra note 8 at 16, https://www.brookings.edu/wp-
content/uploads/2020/07/Broader-View_July_2020.pdf.
\11\Id.
---------------------------------------------------------------------------
H.R. 2813 Obstructs Federal Oversight of Health Insurance Coverage
In recognition that the federal government has authority to
clarify that health insurance that masquerades as stop-loss is
subject to relevant consumer protections,\12\ Republicans have
in the past proposed legislation to exempt stop loss from the
definition of ``health insurance coverage'' under federal
law.\13\ Similarly, H.R. 2813 would amend federal law to exempt
stop loss insurance from the definition of ``health insurance
coverage.'' This is unnecessary and would only serve to hinder
potential efforts to protect consumers and small businesses.
---------------------------------------------------------------------------
\12\See Departments of Labor, Health and Human Services, and the
Treasury, Request for Information Regarding Stop Loss Insurance, 77
Fed. Reg. 25788 (May 1, 2012), https://www.govinfo.gov/content/pkg/FR-
2012-05-01/pdf/2012-10441.pdf.
\13\H.R. 1304, Self-Insurance Protection Act (115th Congress).
---------------------------------------------------------------------------
It is well established that traditional stop loss insurance
policies that insulate employers from catastrophic risk are not
health insurance coverage, and there is no indication that the
federal government plans to regulate stop loss. Therefore, H.R.
2813 would have little immediate impact on federal oversight of
this sector. However, as noted above, the proliferation of
level-funded plans using stop loss as a workaround from
consumer protections may necessitate future action. Indeed,
experts have expressed concern about the inadequacy of the
current federal regulatory framework and argue that it would be
appropriate to clarify that stop loss functioning as de facto
health insurance is subject to rules that apply to other forms
of health insurance coverage.\14\ However, by redefining health
insurance coverage to explicitly exclude stop loss, H.R. 2813
seeks to prevent such action in the future.
---------------------------------------------------------------------------
\14\Young, supra note 8 at 33-4. See also, Mark Hall, Regulating
Stop-Loss Coverage May Be Needed To Deter Self-Insuring Small Employers
From Undermining Market Reforms, Health Affairs (Feb. 2012), https://
www.healthaffairs.org/doi/10.1377/hlthaff.2011.1017.
---------------------------------------------------------------------------
H.R. 2813 Undermines Well-Established State Authority Over Stop Loss
In addition, H.R. 2813 takes the extraordinary step of
amending ERISA's preemption provision to specifically restrict
states that wish to regulate stop loss insurance to protect
consumers and small businesses. The bill provides that all
requirements of title I of ERISA ``shall preempt State laws
insofar as they may now or hereafter prevent an employee
benefit plan that is a group health plan from insuring against
the risk of excess or unexpected health plan claims
losses.''\15\ This undoes decades of jurisprudence that has
long recognized the states' role in regulating the sale of
insurance\16\ and goes beyond previous legislative efforts by
Committee Republicans to prevent regulation of stop loss.
---------------------------------------------------------------------------
\15\H.R. 2813, Self-Insurance Protection Act (118th Congress),
Sec. 4.
\16\See Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724
(1985).
---------------------------------------------------------------------------
H.R. 2813 would call into question numerous existing state
laws and would impede other states from taking future actions
to protect consumers and businesses. For example, Connecticut
law requires that stop loss policies be filed with and approved
by the insurance commissioner,\17\ who has issued strong
substantive standards to ensure that attachment points are set
at reasonable levels.\18\ In addition, some states, including
Delaware, New York, and Oregon, have prohibited the sale of
stop loss to small employers with fewer than a certain
threshold number of employees.\19\ In at least four states,
legislation has been enacted that is similar to the model law
endorsed by the National Association of Insurance
Commissioners, which provides standards regarding attachment
points and prevents stop loss from directly paying health
claims.\20\
---------------------------------------------------------------------------
\17\C.G.S. Sec. 38a-8b.
\18\State of Connecticut Insurance Department, Bulletin HC-126 (May
6, 2019), https://portal.ct.gov/-/media/CID/1_Bulletins/Bulletin-HC-
126.pdf.
\19\Alex Reger & Kristen Miller, State Regulation of Stop Loss
Insurance, Office of Legislative Research (Sept. 27, 2019), https://
www.cga.ct.gov/2019/rpt/pdf/2019-R00193.pdf.
\20\Id.
---------------------------------------------------------------------------
H.R. 2813's Preemption Provision Could Further Hinder State Solvency
and Consumer Protection Standards
In addition to preempting states' authority to enact
specific restrictions on the content of stop loss policies,
H.R. 2813 may even restrict states from applying other
protections that govern insurance carriers generally--including
solvency requirements that prevent underfunding, mismanagement,
and fraud. Under current law, ERISA already broadly exempts
self-insured plans from state law and H.R. 2813's preemption
provision could further hinder states that wish to apply
solvency standards on stop loss sold in connection with the
plan. This could leave states with no clear authority to
regulate the solvency of either the underlying group health
plan or the stop loss policy, placing both workers and
employers at risk of financial harm. It could also leave
individuals harmed by insolvencies with little recourse for
unpaid medical claims.
History has shown the very real risks this presents for
consumers. The historically lax regulation of multiple employer
welfare arrangements (MEWAs) under state solvency and consumer
protection standards has led to numerous high-profile
insolvencies, including numerous instances in which MEWAs left
individuals, employers, and health care providers with tens of
millions in unpaid medical claims.\21\ As the National
Association of Insurance Commissioners put it in 1982 when
state authority to regulate MEWAs was similarly undermined by
preemption:
---------------------------------------------------------------------------
\21\Mila Kofman, et al., MEWAs: The Threat of Plan Insolvency and
Other Challenges, Commonwealth Fund (March 2004), https://
www.commonwealthfund.org/sites/default/files/
documents/
_media_files_publications_issue_brief_2004_mar_mewas_the_threat_of_plan_
insolvency_and_other_challenges_kofman_mewas_pdf.pdf.
---------------------------------------------------------------------------
There is one common theme, however, and that is the
inability of the State regulators to adequately monitor
and regulate the activities of [self-funded MEWAs] that
purport to be welfare benefit programs in order to
insure solvency and proper claims practices. . . .
Simply put, we feel that with respect to the solvency
of these employee welfare benefit plans, no one is in
charge: Not the Labor Department, not the IRS, and by
Federal law, not the State insurance commissioners.\22\
---------------------------------------------------------------------------
\22\Oversight Investigation of Certain Multiple Employer Health
Insurance Trusts (METs), Evading State and Federal Regulation: Hearing
Before the Subcomm. on Lab.-Mgmt. Rel. of the H. Comm. on Educ. & Lab.,
97th Cong. 51 (1982) (Testimony of Beth Kravetz, Federal Affairs
Counsel, National Association of Insurance Commissioners).
---------------------------------------------------------------------------
H.R. 2813's erosion of state authority--when paired with
the bill's similar restriction on federal authority--is
particularly alarming to consumer and patient advocates. A
group of over two dozen consumer and patient advocacy
organizations, including the American Cancer Society Cancer
Action Network, the American Heart Association, and the
Leukemia & Lymphoma Society, expressed grave concerns with H.R.
2813's preemption of state law, warning the Committee that
``[r]emoving states'' ability to regulate stop-loss coverage
would lead to less oversight of these plans, which would
increase the likelihood of misleading marketing and other
fraudulent practices that would prove harmful to employers
purchasing stop-loss coverage as well as their employees.''\23\
---------------------------------------------------------------------------
\23\Patient community concerns about the detrimental impact of
policies included in HR 2868, the Association Health Plans Act; HR 824,
the Telehealth Benefit Expansion for Workers Act; and HR 2813, the
Self-Insurance Protection Act, Letter to Chair Virginia Foxx and
Ranking Member Bobby Scott, H. Comm. on Educ. & the Workforce, Full
Committee Markup (June 6, 2023) (on file with author).
---------------------------------------------------------------------------
H.R 2813 Poses Additional Risks to Consumers and Small Businesses
While employers might view level-funding as a way to avoid
the financial risk of self-insuring while achieving potential
savings, these arrangements nonetheless pose serious risks to
employers and to workers. Families USA, a nonprofit,
nonpartisan consumer health advocacy and policy organization,
points out that ``some small employers may not fully understand
the risks of `level-funded' plans'' and that stop loss is
exempt from protections that apply to health insurance
coverage.\24\ The Massachusetts' Division of Insurance has
publicly advised that small employers should ``take extreme
caution when considering self-funded health plans'' and ``urges
such employers to consider the financial consequences of a year
with higher than projected health claims.''\25\ For example, an
insurer may offer a low rate to a small business for stop loss
that makes level-funding attractive initially, but following a
year in which claims are unexpectedly high may immediately
raise premiums to an unaffordable level. Because it is not
health insurance coverage, stop loss is exempt from provisions
that could mitigate such harms--such as the ACA's requirement
of annual rate review of unreasonable premium increases.\26\ By
further tying the hands of state and federal regulators that
seek to protect consumers and employers from these
arrangements, H.R. 2813 would exacerbate these risks.
---------------------------------------------------------------------------
\24\Families USA, Statement for the Record, H. Comm. on Educ. & the
Workforce, Full Committee Markup (June 6, 2023) (on file with author).
\25\Massachusetts Division of Insurance, Consumer Alert: Beware of
the Risks in Self-Funded Health Plans, accessed June 9, 2023, https://
www.mass.gov/service-details/consumer-alert-beware-of-the-risks-in-
self-funded-health-plans.
\26\42 U.S.C. Sec. 300gg-94.
---------------------------------------------------------------------------
Finally, as with proposals to expand association health
plans, H.R. 2813 threatens the broader insurance market. The
ACA ensured a level playing field in the small group market by
requiring insurers to use a single risk pool and comply with
consumer protections such as coverage of Essential Health
Benefits. However, because self-insured plans are not subject
to these requirements, increasing incentives for sponsors to
level-fund their plans risks segmenting the insurance market
and--when healthier groups leave the single risk pool--
disadvantages those left behind. As Families USA notes,
``level-funded plans not only pose risks to those families who
rely on them for insurance, they can negatively impact families
that access insurance in the traditional insurance markets by
eroding risk pools.''\27\ The Center on Budget and Policy
Priorities similarly warns that the legislation would ``segment
insurance markets.''\28\ When market segmentation occurs,
older, sicker groups suffer, and health coverage becomes less
affordable and potentially out of reach.\29\ As a result, H.R.
2813 threatens to raise costs throughout the broader health
insurance market and could make it more difficult for certain
groups to access affordable coverage.
---------------------------------------------------------------------------
\27\Id.
\28\Sarah Lueck, House Health Proposals Would Undermine Consumer
Protections and Expand High-Income Tax Benefits, Center on Budget and
Policy Priorities (June 5, 2023), https://www.cbpp.org/blog/house-
health-proposals-would-undermine-consumer-protections-and-expand-high-
income-tax.
\29\See, e.g., American Academy of Actuaries, Drivers of 2020
Health Insurance Premium Changes (June 2019), https://www.actuary.org/
sites/default/files/2019-06/PremiumDrivers
2020.pdf.
---------------------------------------------------------------------------
Democratic Amendment Offered During Markup of H.R. 2813
Committee Democrats put forward an amendment to improve the
bill. The amendment would have mitigated the harm posed by the
legislation by preserving the ability of states to regulate
stop loss insurance and act in the best interests of their
residents. Committee Republicans unanimously rejected the
amendment.
----------------------------------------------------------------------------------------------------------------
Amendment Offered By Description Action Taken
----------------------------------------------------------------------------------------------------------------
#2................................... Mr. Courtney........... Strike section 4 of the Defeated
bill that prohibits
states from regulating
stop loss.
----------------------------------------------------------------------------------------------------------------
Conclusion
Committee Democrats are concerned about H.R. 2813, the
Self-Insurance Protection Act, and the risks it poses to small
employers and workers. Committee Democrats are committed to
reducing health care costs and protecting access to
comprehensive health coverage. For the reasons stated above,
Committee Democrats unanimously opposed H.R. 2813 when the
Committee on Education and the Workforce considered it on June
6, 2023. We urge the House of Representatives to do the same.
Robert C. ``Bobby'' Scott,
Ranking Member.
Joe Courtney.
Mark Takano.
Mark DeSaulnier.
Pramila Jayapal.
Lucy McBath.
Teresa Leger Fernandez.
Frank J. Mrvan.
Raul M. Grijalva.
Gregorio Kilili Camacho Sablan.
Suzanne Bonamici.
Alma S. Adams.
Susan Wild.
Jahana Hayes.
Haley M. Stevens
Jamaal Bowman.