There’s no impediment in local law that prevents the government of Guam from self-insuring employees, dependents and retirees covered under the GovGuam group health plan, according to an opinion issued Monday by the Office of the Attorney General.

The government’s intention to seek a fully self-insured health care plan came under scrutiny from lawmakers during a hearing Thursday, when Republican minority leader Sen. Frank Blas Jr. questioned whether the local government had complied with insurance regulations laid out in Guam law.

Instead of contracting insurance coverage out to companies such as TakeCare or Aetna, as was done in the past, the Office of the Governor announced last week that it will instead be opting to cover its own health insurance costs for fiscal year 2024. Department of Administration Director Edward Birn, who led negotiations for the health plan, told lawmakers the big changeover is meant to keep good coverage at a lower cost, though it is expected to cost GovGuam between $90 million and $110 million annually.

Birn, responding to concerns aired Thursday by Sen. Blas, said he was informed by the Office of the Attorney General that there was no requirement for the government to be certified as an insurance provider through the local banking and insurance board. However, Birn did not have that legal advice in writing at the time, which prompted skepticism from the senator, who is himself involved in the insurance business.

Legal opinion

Attorney General Douglas Moylan on Monday sent a legal opinion to Birn stating that the government is free to proceed with self-insurance without being certified as an insurance provider. The opinion provided boils down to the fact that GovGuam isn’t considered a “person” under the law.

Local insurance regulations require any person or organization to be certified as an insurance provider before doing business, but the fact that the government doesn’t qualify as a person is well settled in prior legal rulings, the opinion states, pointing to previous rulings in the U.S. Supreme Court.

“Although the government of Guam can be self-insured and is arguably an insurer (insurance carrier), only ‘persons’ are required to obtain a certificate of insurance,” the opinion states. “As shown above, the U.S. Supreme Court has held that “persons” does not refer to governmental entities. Hence, DOA would logically not be required to obtain a certificate of insurance.”

The Legislature authorized GovGuam to seek a self-insured health plan, through 2014’s Public Law 32-189, the opinion continues, and, barring a change to the law, that authority stands. Additionally, the third-party administrator chosen by the government that will be handling the payout of benefits for fiscal 2024, Calvo’s SelectCare, does not have to register, either.

Sen. Blas could not be reached immediately for comment Tuesday on whether the opinion put to bed his concerns about the move to self-insurance. Beyond regulatory questions, Blas has also raised concern over the fact that costs for the plan are not accounted for in the fiscal 2024 budget act, which lawmakers are now debating on the legislative session floor.

GovGuam’s move to self-insurance has also raised doubts from members of the medical community, the Post reported, with Dr. Hoa Nguyen of American Medical Center questioning whether the government could pay out medical providers in a timely manner. Representatives from Calvo’s SelectCare gave assurances that the company will be making the payments and awaiting reimbursement from the government and that claims will be paid out in a timely manner.