Self-Insured Health Plans on the Rise
Large employers are continuing to make more use of self-insurance programs, but the small employers that still offer health benefits are making less use of self-insurance.
Paul Fronstin, an analyst at the Employee Benefit Research Institute (EBRI), has published data supporting that conclusion in a report based on federal government survey data.
Fronstin found that the percentage of all U.S. private-sector group plan enrollees who are in self-insured plans increased to 58.5% in 2011, from 57.5% in 2010.
The percentage has increased every year since 2006 and is up from a modern low of 40.9% recorded in 1998.
But Fronstin found a size-based split in use of self-insurance: The percentage has increased to 68.5%, from 67.5%, for employees of employers with 50 or more employees, and it has fallen to 10.8%, from 12.5%, for employees of employers with fewer than 50 employees.
An employer with a self-insured or self-funded health plan has the plan itself assume most or all of the claims risk. The employer can hire an ordinary retail health insurer, or an independent third-party administrator, to run the plan, and an employer can buy stop-loss coverage, or health plan insurance, to cover claims that exceed pre-set limits.
States have the legal authority to impose coverage requirements, or mandates, on small employers' self-insured plans but not on large employers' self-insured plans.
Analysts at EBRI looked for evidence that small employers were more likely to self-insure in states with large numbers of mandates, but it found no clear correlation between the number of mandates a state imposes and the percentage of employers that self-insure, Fronstin said.
EBRI analysts would like to look harder at the possibility that a correlation exists by, for example, using data that shows how costly a state's mandates are, as well as how many mandates the state imposes, or data showing how much state health insurance laws and regulations other than benefits mandates cost, Fronstin said.