Today, over 60 percent of all employers in the U.S. self-insure their employee medical benefits. And the self-insurance rate is poised to grow even more. This may come as a surprise to those used to the days, not long ago, when the majority of employers purchased a fully insured product from an insurance company, a Blue Cross Blue Shield organization, or a Health Maintenance Organization (HMO).

A growing market

Health plans and providers increasingly view self-funding as a viable market opportunity. Many health providers that initially chose to self-fund their own benefit plan, for example, now desire to introduce a self-funded product in their market. It makes good business sense. Self-funding offers an opportunity to drive more patients to provider-owned facilities and capitalize on synergies with employer clients and distribution partners.

With the increased popularity of self-funding, many health plans have become active in the employer stop loss (ESL) business – and many more are seeking to enter. ESL insurance allows employers to self-fund while protecting against catastrophic or unpredictable losses, as the insurer provides coverage for losses that exceed defined limits. Exposure from specialty drugs and continued growth in $1 million+ claims are among the high-cost growth drivers for ESL insurance.