Self-funded group health plans seem to be similar to insured group health plans, and they appear to offer comparable benefits and have comparable claim denial rates, Obama administration officials say.
Congress required the U.S. Department of Labor and the U.S. Department of Health and Human Services (HHS) to give it information about the self-funded health plan market in Section 1254 of the Patient Protection and Affordable Care Act (PPACA).
Members of Congress wanted to see whether large numbers of self-funded plans might respond to new PPACA health plan requirements by fleeing to the self-funded market, which will face somewhat fewer restrictions.
The self-funded market may prove to be more appealing than the insured market when more PPACA provisions start taking effect, HHS officials say in their self-funded market report.
“If employers with healthy employees opt for self-insurance and leave employers with sicker employees in the community-rated pool, this may lead to adverse selection and increases in premiums for those in the community-rated group,” HHS officials say. “However, the extent of this shift is expected to be limited because self-insurance entails much greater financial risks than full insurance, and these greater risks will likely discourage many small employers from switching to self-insurance.”
The Labor Department reviewed data from 2008 Form 5500 plan reports and found that 12,000 health plans that filed Form 5500s were self-insured, and that 5,000 used a mix of insurance self-funding.
The self-insured plans covered about 22 million participants and held $35 billion in assets, and the mixed plans covered 25 million participants and had $84 billion assets, officials say.
HHS officials turned to outside consulting firms and found that, when adjusted for employer size and type of coverage offered, self-insured plans offered similar benefits, seemed to approve claims at roughly the same rate, and seemed to be offered by equally stable employers.
The shakiest employers were somewhat more likely to be fully insured, officials say.
Plan costs seemed to be roughly the same, officials say.