RUSH: Let me talk a little bit about self-insurance. When I moved to Florida, of course one of the first things a newly arrived resident in Florida does is start worrying about hurricanes, because you’re under the impression that they’re gonna happen every year. And so you buy a house, if you happen to buy a house on the ocean, you get really, really, really worried about hurricanes. So the first thing you do is you start examining insurance, and you find out that it makes no sense whatsoever to buy hurricane insurance. My first quote, this is 1997, 1998. It wasn’t actually called hurricane, it’s called wind and excessive force, a bunch of crazy names to it, but the bottom line was that the deductible was $2 million.
I quickly ran a calculation, $2 million? We’re gonna need a series of Category 5s to destroy this brick thing I’ve got here. Two million deductible? That means if there’s any damage whatsoever, I’m gonna be paying for it anyway. So then I explored the option of self-insurance. Self-insurance is simply no insurance. And when damage happens, you fix it, you pay for it. And of course you’re rolling the dice that there isn’t gonna be much and that the hurricanes that do hit will not be very strong and maybe none will hit you. By the way, the $2 million deductible, the premium for this was like 800, $900,000 a year, and it quickly grew in the two or three years. The premium was a million dollars a year, the deductible was two million. This doesn’t make any sense.
So I made the calculated decision to self-insure. I would tell people and they’d say, “What do you mean?” And, by the way, I didn’t invent it. It’s just a name for fixing it yourself when something goes wrong. Now, you can go through the motions of setting aside some money in an account somewhere that you don’t touch that’s there for a rainy day or you can just roll the dice that you can borrow what you need or what have you. But the point is you do not buy an insurance policy, and you do not pay a premium, and there isn’t any deductible.
Well, you can do the same thing in health care. And I do it in health care as well. Now, George Pataki, the ex-governor of New York, who, by the way, really liked my neckties when I had my TV show and requested a bunch. I sent them to him, never got a thank-you note. Well, he mighta sent one. I never got it. I get so much mail. Don’t anybody send him a note, please. He probably did send a thank-you. I just didn’t see it. It isn’t any big deal.
He’s got a piece in the New York Post today: “An Escape Hatch from Obamacare — As Obamacare continues to crash, smaller businesses and their employees may have an escape hatch from many of the lawÂ’s worst features — but the administration and its left-wing allies are trying to close the door. When Congress passed Obamacare, Republicans managed to secure important protections for ‘self-insurance’ that now provides a way for businesses to escape the most egregious parts of the law: Self-insured health plans are exempt from many of the taxes and mandates that Obamacare otherwise imposes on businesses and individuals.”
Now, what is a self-insured plan? If you work at a business or if you are a business, what is a self-insured plan? “A self-insured health plan is one where the employer directly funds its own medical costs — that is, rather than paying premiums to an insurance carrier to cover its employees, it sets aside the cash to cover anticipated expenses. (The business often hires an insurance company to manage employeesÂ’ claims, but the insurer isnÂ’t actually selling insurance, just its claims-processing services).”
So in a business, say, let’s take a business of a hundred people. A company will not buy health insurance for them and will not offer insurance as a benefit, but if the employee gets sick, has to go to the hospital, the business pays it. That’s the benefit. The business pays the bill. The business pays the doctor. It’s sort of like cash service, in a sense. I mean, just as a way of explaining this. A self-insured plan is one where the employer directly pays its own medical costs for the employee, not an insurance company. There is no middleman.
People in these plans right now are exempt from Obamacare, because they don’t require insurance. There’s no mandate. There’s no penalty. There’s no tax, and a lot of businesses — I could name some, but I’m not gonna make targets out of ’em because they are being targeted now by the regime. The regime and the Democrat Party are going after these plans. The regime and the Democrat Party are making tracks right now to go after every business that does self-insure.
Now, according to George Pataki, “more than 60 percent of workers in large corporations and 80 percent of unions, along with 15 percent of workers in small businesses, are covered by self-insured plans. In fact, most of the 100 million workers now covered by self-insured plans donÂ’t even know it. The differences to them are that minimal.” It’s an employee benefit. All they know is they’ve got health care. They know they’ve got dental. They know they’ve got a deductible. They know they’ve got a copay. They know they’ve got this, but they don’t know that the business is directly paying for it rather than getting an insurance policy that they’re all part of.
“The exemption from many ObamaCare rules will encourage more businesses to shift to self-insurance — but thereÂ’s a nationwide drive to stop them. The White House is leading the charge to close what it calls the ‘self-insurance loophole’ with a laundry list of tactics that were spelled out in a paper published by the hyper-liberal Center for American Progress, titled ‘The Threat of Self-Insured Plans Among Small Businesses.'”
Now, why would they care? Why would a left-wing website care? As long as people have insurance, as long as the employees are covered, why do they care how? And there is, again, another answer that if people just open their eyes, they’d understand what this is really all about, and it ain’t health care. It’s about control. It’s about having power over people. It’s about being able to deny you or grant you health care. You realize there are no death panels for people in self-insured plans. The self-insured plans do not generally require you not to eat or drink this or that. They just cover you, because there’s no insurance policy in place.
What they do have… Again, the businesses that do this, if they’re large, hire an insurance company to manage the claims. So that if you’re an employee at one of these self-insured plans, and you have to go to the doctor or you have to go to the hospital, you submit the claim to the business. It’s the human resources people. They’ve got an insurance company managing that, but the insurance company has no say-so in whether it’s paid or not.
The business does that.
That, of course, is wonderful because that’s a direct relationship you have with the employer — and it’s cheaper because there is no third party. There are no premiums. There are no insurance companies. There’s no Obamacare mandate, none of this — and that is precisely why there is a huge move now on the part of the left to close these down because they call it a “loophole,” and it’s not a loophole. The Republicans secured this exemption.
I don’t know how. Don’t ask me how they did it, but they did. Somebody wasn’t thinking at the time. They had to give the Republicans something. In fact, Pataki says here that the regime has “already had some success: A new California law greatly increases the cost to self-insure. Here in New York, legislation effectively bans companies with fewer than 50 employees from self-insuring. Republicans (and independent-minded Democrats) in Congress and in the states need to stand firmly against these efforts.
“ItÂ’s the best way for businesses — small, medium and large — to avoid many of the taxes and mandates that come with Obamacare. According to industry research, a typical self-insured group…” Are you ready for this? This is according to industry research — research of actual, real-life circumstances. ” According to industry research, a typical self-insured group can expect to save more than 10% (versus traditional health insurance) without having to sacrifice quality of care.
“Even uninsured individuals in many states can access self-insurance via trade associations and community groups, instead of having to buy high-cost individual policies through the Obamacare exchanges,” but nobody knows this. Very few people know it. You do a little test. The next time you run into group of friends of yours, start talking about the concept of self-insurance and find out for yourself what they know about it.
Nobody knows about it, and the reason nobody knows about it is because the whole concept is foreign. “What, pay for it myself? What do you mean?” That’s such a foreign concept. But self-insurance in this case is not the employee paying for it per se. The business is, and it’s still offered as a benefit. Some businesses offer more than others. It’s not universal. Some businesses will offer dental, some don’t. Some offer very low co-pay, some don’t.
It just depends on, you know, what kind of plan they have to offer to attract the kind of quality workers they need, like anything else. What do you have to do to get the best? Since health care is number one number one demand of all employees, it becomes highly competitive. But the main attraction to self-insurance, in addition to obviating the need for an insurance company, is that you are exempt from all of these mandates and all these requirements and all the penalties and all the taxes, because you’re covered.
You’re covered by your business — and I’m telling you, the regime hates it. That’s why they’re struggling. They’re working fast to try to close the loophole, and the way they’ll go about it is the way they do everything: “Well, it’s not fair! This isn’t fair. Why should some people work at places that have self-insurance health plans and some people can’t? It’s not fair.” Of course, the way the left makes things “fair” is to make things worse for everybody and call it equality.
But I thought you might find it interesting, Pataki’s piece is in the New York Post today. There’s a little bit more to it, but that basically is the concept. Again, it’s how I made the decision long ago to deal with just ridiculous hurricane insurance. Now, that’s changed somewhat since then, because it’s become a little bit more affordable, so there are aspects now of hurricane coverage that I do have. But nowhere near do I have a $2 million deductible or any of that. It’s ridiculous.
When I heard that, what I heard was, “They don’t want to sell this policy. When they put a $2 million deductible, they don’t want to sell it. They don’t want to insure houses on the beach against hurricanes. They don’t even want to mess with it,” and if you’re silly enough to buy it? Fine. It’s a free market. Spend your money however you wish. Self-insurance, though? Just whole concept is foreign to so many people because so many people are not accustomed to paying the freight for health care.
It’s something that everybody thinks somebody else is paying for. But in this case, the business is paying for it. They’re just paying it directly. So instead of paying an insurance company, they pay the hospital. Instead of paying an insurance company, they pay the doctor, or the association that these hospitals and doctors are members of. It’s simply a measure of control and a way to avoid all this stupid penalty garbage and minutia requirements that are part of the federal government’s demands in this area.