More Employers Jump to Self-Funding

A recent report issued by accounting and consulting firm PWC shows that the number of employer groups self-funding their health benefit plans has increased by 20% from 2008 to 2010. The ability to avoid huge cost increases that carriers are anticipating over the next few years and access to claims data available in a self-funded, TPA-administered environment were cited as important reasons for the unprecedented jump.

This study echoed the DOL Report on Self-Insured Group Plans, in which data compiled by Deloitte indicated that for employers with more than 200 covered lives, the average fully insured premium increased by $808.00 from 2009 to 2010, compared to an increase of $248.00 for self-insured plans. As required under the Patient Protection and Affordable Care Act (PPACA), the Secretary of Health and Human Services (HHS) conducted the study to determine whether these lower costs were due to more efficient plan administration and lower overhead, to the denial of claims or to the offering of health benefit plans that are very limited in scope.

Self-Funding Earns High Marks from HHS & DOL
The PPACA requires that HHS and the Department of Labor (DOL) conduct a comprehensive study comparing traditional insured plans to self-funded and partially self-funded plans. The report, released in late March of this year, indicated that there are no statistically significant differences in the level of benefits offered and no difference in the rate of claim denials between fully insured and self-funded health plans.

The report also concluded that no relationship existed between the financial health of a company and their choice of funding mechanism. In other words, financially strong companies are not necessarily more likely to be self-insured or partially self-insured and financially weaker companies are not always fully insured.

When investigating the possibility of a conflict of interest in claims adjudication by self-funded plans when compared to traditional insured plans, HHS and DOL concluded that no such conflict of interest existed. In another key finding, the study determined that no difference in out-of-pocket costs existed for self-insured plan participants compared to fully insured plan participants.

Overall, the PPACA-required report confirmed that self-funded health benefit plans continue to grow because they offer greater flexibility, lower fixed costs and the data needed to better manage the risks and costs associated with health care.

For More Information
Contact Physicians Care at (616) 464-6633 or (800) 968-3033 for more information on self-funding your health benefit plan.