Health care reform has stop-loss insurers and unions thinking about what the president of Union Labor Life Insurance Co. calls "disruptive innovation."
"You have to stir up the pot and come up with a solution others haven't thought about," Gary L. Burke, president of Union Labor Life, told BestWire.
The implications of the health care bill on Union Labor Life and other stop-loss insurers could be dramatic. Burke said more than 50% of all American workers are under a self-funded insurance plan, which uses stop-loss insurance to protect against catastrophic losses due to high-dollar claims or a large number of claims. An employer chooses to self-fund its health care plan instead of paying premiums to insurers -- contracting the management of the fund to a third party administrator. Self-funded plans are a "significant engine for small businesses," Burke said.
"It's giving them the comfort when they go to sleep at night that their back is taken care of -- they know how much, exactly, they are going to have to pay," Burke said.
The reform is a "big question mark," Burke said. The health bill prohibits plans from capping annual and lifetime limits. Burke said some thought is being given to "reasonable annual caps," but what that means is anyone's guess until the U.S. Department of Health and Human Services defines it. Until then, the company is planning a summit in mid-May in Chicago with unions to talk about how the reforms will affect the labor force.
Burke was brought in to Union Labor Life, a provider of group life and health and stop-loss coverages, as a consultant in June 2008 to provide leadership and turn around a company that was on the brink of bankruptcy within the past decade. Burke has since become president and preaches transparency while remaining a major player in a competitive market. "Just because we're owned by labor doesn't mean we're going to win," Burke said. Those results are driven by rates and competency, but Burke said he remains disciplined in pricing. "We're not going buy business," he said.
In 2009, Union Labor Life posted $149 million in revenue and $9.1 million in profits -- each an 8% increase compared with the prior year. Burke said the company added $10 million in new business during the first half of 2009 but the pace slowed as the recession took hold. Still, going into 2010, Union Labor Life has retained 85% of its stop-loss business and 92.5% of group life and health business.
Union Labor Life Insurance Co. currently has a Best's Financial Strength Rating of B+ (Good).