Jon Gabel and other analysts at a University of Chicago research center say states should consider protecting Patient Protection and Affordable Care Act commercial health insurance market rules by doing more to limit access to the stop-loss insurance market.
If states fail to make it harder for small employers to use stop-loss insurance to self-insure, brokers may help many small employers cut health benefits costs by self-insuring, Gabel and his colleagues wrote in a new paper published in Health Affairs.
The researchers polled 604 private U.S. employers with three to 50 employees from January through June. They found that 72 percent of the employers offered health benefits, and 80 percent of the firms that offer health benefits use agents or brokers.
Twenty-six percent of the managers at firms that use brokers said the brokers had discussed self-insurance.
Only 1 percent of the employers that get benefits on their own have thought about self-insuring.
PPACA exempts self-insured plans from many coverage requirements, such as benefits package requirements, that are set to apply to fully insured small-group plans starting in 2014.
The researchers found that the benefits managers were much more interested in cutting plan costs than in offering workers access to the kinds of features that might be available through the new PPACA small-group exchange program, such as access to broad menus of plan choices.
Projections show that self-insured coverage could cost about 25 percent less than PPACA-compliant coverage for single workers and about 19 percent less for workers with family coverage, the researchers wrote.
Just 12 percent of small firms seem to be very or somewhat likely to switch to self-insurance in the next few years, but those figures may underestimate the threat self-insurance poses to the PPACA plans, the researchers said.
After a few years, “the small-group market could reach a tipping point that would leave the fully insured markets with greater risks, higher premiums, and eventually a so-called death spiral,” Gabel and his colleagues concluded.