HR Administration

White House Suggestions on Funding Contraception Coverage Called ‘Unworkable’

By Jerry Geisel

Mar. 20, 2012

The Obama administration’s suggestions on how prescription contraceptive coverage should be funded for self-insured affiliates of religious organizations are “unworkable,” a top executive of the Self Insurance Institute of America Inc. says.

“The notice demonstrates the administration’s general lack of understanding of how self-insured group health plans operate and, more specifically, the role of third-party administrators,” according to a statement by institute Chief Operating Officer Michael Ferguson.

Ferguson’s statement, which was released Monday, came in the wake of an administration notice last week that it would like comments on a range of proposals on how the coverage should be funded for self-insured affiliates, like health care systems, of religious organizations.

Under one administration suggestion, TPAs could fund the coverage through rebates they receive from drug manufacturers that the TPA is not contractually liable to forward to the affiliates.

But that approach wouldn’t work for a basic reason, Ferguson said: “Any rebates go right back to the plan sponsor and not the TPA.”

Another administration idea is for the TPA to collect funds from a private, nonprofit organization to pay for the contraceptives.

Ferguson dismissed that suggestion as unrealistic.

“It’s hard to believe that the departments have seriously floated this as a viable option for consideration. Do they really believe that TPAs will actively solicit voluntary funding from nonprofit organizations? No TPA would do this,” Ferguson wrote.

Additionally, the administration said the affiliates could move away from self-insurance, with an insurer providing the coverage. In that situation, under an administration regulation, the insurer would pay for the contraceptive coverage.

Ferguson noted that the affiliates self-insure because they believe that funding approach will help them to better control costs and customize their health care plans. For the administration to suggest that the affiliates should “forgo these advantages simply to accommodate a new regulation is not good public policy and would seem to conflict with Obama’s guarantee that if you like your health plan, you will be able” to keep it, Ferguson wrote.

Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management. To comment, email

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Jerry Geisel writes for Business Insurance, a sister publication of Workforce Management.

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