Self-Insured Plans Growing, Driven By Large Employers

from Spencer’s Benefits Reports: The percentage of workers in private-sector self-insured health plans has been increasing since 1998, according to a recent report from the Employee Benefit Research Institute (EBRI). The study, Self-Insured Health Plans: State Variation and Recent Trends by Firm Size, published in the November 2012 EBRI Notes, found that in 2011, 58.5 percent of workers with health coverage were in self-insured plans, up from 40.9 percent in 1998.

A “self-insured plan” is one in which the employer assumes the financial risk related to health insurance, while a “fully insured plan” is one in which an insurance company is paid to assume the risk. Historically, large employers have been the companies that provide self-insured plans, but since the passage of the Patient Protection and Affordable Care Act, EBRI notes that there has been speculation that an increasing number of smaller employers would opt for self-insurance. However, EBRI found that in 2011, 68.5 percent of workers in firms with 50 or more employees were in self-insured plans, while only 10.8 percent of workers in firms with fewer than 50 employees were in self-insured plans.

“Employers generally, and small employers particularly, concerned about the rising cost of providing health coverage may view self-insurance as a better way to control expected cost increases,” said Paul Fronstin, director of EBRI’s Health Research and Education Program.

EBRI found that while 58.5 percent of all workers were in a self-insured plan, this varied state-by-state, from a low of 30.5 percent to a high of 73.8 percent. Hawaii (at 30.5 percent) was the only state with fewer than 40 percent of workers with health insurance in self-insured plans. In seven states (Montana, California, Rhode Island, Oregon, Vermont, North Dakota, and South Dakota), between 40 percent and 50 percent of workers with health insurance were in self-insured plans. Only two states (Indiana and Minnesota) had more than 70 percent of workers with health insurance in self-insured plans.

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