Small employers are adopting self-insured health plans, as large companies retreat
- As small employers picked up more self-insured health plans, large employers dropped them, a new report by the Employee Benefit Research Institute (EBRI) says. According to EBRI's briefing, “Self-Insured Health Plans: Recent Trends by Firm Size, 1996‒2016,” the percentage of small employers (fewer than 100 employees) offering self-insured plans rose from 14.2% in 2015 to 17.4% in 2016. But, in the same year, the percentage of midsize employers with a self-insured plan dropped from 30.1% to 29.2%, and large companies (with 500 or more workers) offering self-insured plans fell from 80.4% to 78.5% during that time.
- The director of EBRI's Health Education and Research Program, Paul Fronstin, said that when the Affordable Care Act (ACA) was passed in 2010, the expectation was that healthcare costs would rise, making self-insured plans an attractive option for employers looking to save costs. But instead, enrollment in self-insured plans overall fell from 60% to 57.8% between 2015 and 2016, the research shows.
- The increase in small employers offering self-insured plans wasn't large enough to offset the drop in these plans by large companies because of the massive number of employees big employers hire. The result is a decrease in the number of workers covered by self-insured plans.
Self-insured health plans, like high-deductible health plans (HDHPs), wellness programs and other cost-saving options, don't seem to be having the effect many employers expected. Many companies opted for self-insured plans because of the control over health expenditure data that such an arrangement allows.
Unsurprisingly, no one seems to have discovered the "silver bullet" to overall cost-containment — partly thanks to the deep complexity of the problem. Only the "best performing companies" managed to do well in subsidization and plan design to contain costs, and those companies had to take multiple approaches to see success, including evaluating pharmacy benefit contract terms and promoting the use of specialty generic drugs. Pharmaceutical costs remain the thorn in the side of many healthcare plans, as well as complex medical procedures and treatments.
A number of corporations — including Amazon, Apple, JPMorgan Chase and Berkshire Hathaway — have instead bet on direct employer intervention in the market to bring about change. But what that will actually look like remains to be seen.
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