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EBRI: Self-insured plans continue to gain share

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Large employers are continuing to make more use of self-insurance programs, but the small employers that still offer health benefits are making less use of self-insurance.

Paul Fronstin, an analyst at the Employee Benefit Research Institute (EBRI), has published data supporting that conclusion in a report based on federal government survey data.

Fronstin found that the percentage of all U.S. private-sector group plan enrollees who are in self-insured plans increased to 58.5 percent in 2011, from 57.5 percent in 2010.

The percentage has increased every year since 2006 and is up from a modern low of 40.9 percent recorded in 1998.

But Fronstin found a size-based split in use of self-insurance: The percentage has increased to 68.5 percent, from 67.5 percent, for employees of employers with 50 or more employees, and it has fallen to 10.8 percent, from 12.5 percent, for employees of employers with fewer than 50 employees.

An employer with a self-insured or self-funded health plan has the plan itself assume most or all of the claims risk. The employer can hire an ordinary retail health insurer, or an independent “third party” administrator (TPA), to run the plan, and an employer can buy stop-loss coverage, or health plan insurance, to cover claims that exceed pre-set limits.

States have the legal authority to impose coverage requirements, or mandates, on small employers’ self-insured plans but not on large employers’ self-insured plans.

Analysts at EBRI looked for evidence that small employers were more likely to self-insure in states with large numbers of mandates, but it found no clear correlation between the number of mandates a state imposes and the percentage of employers that self-insure, Fronstin said.

EBRI analysts would like to look harder at the possibility that a correlation exists by, for example, using data that shows how costly a state’s mandates are, as well as how many mandates the state imposes, or data showing how much state health insurance laws and regulations other than benefits mandates cost, Fronstin said. 

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