Large private-sector employers are turning increasingly to self-insured health plans, according to a new report from the Employee Benefit Research Institute.
In 2011, 59 percent of workers with health coverage were in self-insured plans, up from 41 percent in 1998, the report finds. Researchers predict the trend will continue as employers look for ways to control health care costs. That’s driven even more by the fact that the report notes that many employers expect health reform components will work to drive up the cost of health coverage.
“Employers generally, and small employers particularly, concerned about the rising cost of providing health coverage may view self-insurance as a better way to control expected cost increases,” says Paul Fronstin, director of EBRI’s Health Research and Education Program and author of the report. “This new analysis provides a baseline against which to measure future trends.”
Historically, large employers have been far more likely to self-insure than have been small employers, the EBRI report notes, and there are significant incentives for them to do so: Large multi-state employers can provide uniform health benefits across state lines if they self-insure (lowering administrative costs) and also are not required to cover state-mandated health care services—as are fully insured plans.
Massachusetts, the only state to have enacted reform similar to PPACA, has seen an increase in workers in self-insured plans among all firm sizes, except among workers in firms with fewer than 50 employees, EBRI notes.
In a self-insured plan, the employer assumes the financial risk related to health insurance rather than transferring that risk to an insurance company in a fully-insured plan.