Employers see self-insurance as hedge against ACA health costs

More corporate interest in self-funded plans, particularly from small employers, reflects fears that health system reform will send insurance rates skyrocketing.

By — Posted April 30, 2013

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

Executives in health insurance and related businesses expect to see acceleration of companies self-funding their employee insurance plans as the mandatory health insurance aspect of the Affordable Care Act is implemented. Employers view it as a way to further control what they see as cost hikes prompted by health system reform.

Of the 326 executives surveyed by Munich Health North America-Reinsurance Division, 82% said they heard more interest during the last 12 months in employers self-funding their group health insurance plans. That includes 32% who said interest has increased “significantly.” As a result, 69% said they expected their business in administering self-funded plans to grow. The survey was conducted March 3-11 and released in April.

The trend toward self-funding is being driven by employers who are trying to control the costs of employee health benefits, said Richard Phillips, president of Munich Health North America-Reinsurance Division, in a statement.

“A properly designed self-funded health plan can allow a company to directly reap the benefits of their cost-containment and wellness activities as opposed to having to pay a monthly premium based on an arbitrary set of rating restrictions,” Phillips said in a statement. “As companies struggle with the growing cost of providing quality benefits, we expect self-funding to continue to grow in popularity.”

The majority of executives surveyed in the Munich report said they expect the ACA to increase health insurance premiums. Forty-two percent said premiums will increase by more than 25%. Forty-four percent said premiums will rise between 10% and 25%, and 11% said premiums will go up 10%. The remainder said it will have no impact, or premiums will decrease.

Big companies favor self-funded insurance

Self-funding of insurance has long been on the upswing. The Employee Benefit Research Institute reported in November 2012 that self-funded plans increased from 40.9% in 1998 to 58.5% in 2011. It found that large companies were most likely to offer them. Sixty-nine percent of employees with 50 or more workers were in self-insured plans in 2001, compared with 10.8% of workers in companies with fewer than 50 employees.

However, small companies are looking more seriously at self-funding, said Andrew Thompson, CEO of TS Insurance Group, a health insurance consulting firm in Heathrow, Fla. Those with good loss histories regarding their employees’ health plans are particularly interested, he said.

“Small employers usually have a good idea whether their employees have serious health problems,” Thompson said.

The Employee Retirement Income Security Act of 1974 governs self-insured plans. They usually are exempt from state laws that may have stronger regulations than ERISA — notably, ones that require insurance plans to pay physician claims within a certain number of days.

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn