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Self-funded health insurance is growing by going smaller

Employers face the task of figuring out how to offer benefits without exposing themselves to claims that could destroy their bottom lines or even their companies.

By Nathan Solheim | Updated on June 01, 2012

Employers these days are looking at ways to control health care costs. They hear health care is an important benefit to their employees, but face the task of figuring out how to offer the benefit without exposing themselves to claims that could destroy their bottom lines or even their companies. 

So it would seem counterintuitive for employers—especially small to mid-size organizations—to assume more risk in today’s marketplace. But that’s exactly what’s happening thanks to self-funding, or self-insurance. 

Industry veterans report that over the past decade, more and more small to mid-size employers have turned to self-funding as a way to control costs, offer valuable health care benefits and keep employees productive. 

“It started off slow; it was a new concept. But now that health care costs keep going up, people are looking for alternative ways to finance health care,” says Jim Carlson, president of HCFS of Wisconsin in Pewaukee, Wis. “We’ve seen more interest than in the past. While they’ve been out there for a decade, each year it gets more and more attractive.”

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