Self-funding is a vehicle, not the destination

To self-fund or not to self-fund, that is the question. As the fully insured market continues to get slammed by unreasonably large rates increases, more employers are looking to self-funding as an opportunity to escape the choke hold of ever-increasing premiums. Watching the popularity of self-funding grow is exciting, but I advise employers to proceed with caution. Self-insuring the health plan opens an employer to great opportunity, but looking to self-funding as the ultimate destination may bring great disappointment. Simply put, self-funding is a vehicle, not the destination. It is not the solution; it is an avenue providing an organization with the opportunity to do some incredible things with its health plan. Look at it this way: Without a destination in mind or a road map to get there, an automobile is useless. However, if you have a chosen destination with a clear set of directions to get there, an automobile becomes an efficient vehicle allowing you to arrive at your destination successfully.

In the case of self-funding, I hope your destination is control— control of costs and control of how health care services are purchased inside your plan. With that, I have some good news. There are employers out there who have already created the road map. There are industry rebels who are already helping self-funded employers successfully arrive at their destination ahead of everyone else. You see, if you research these employers and industry rebels, you will find they all share one thing in common. The status quo has no place in their world. Their road maps do not include shopping carriers, increasing deductibles or employee contributions. They do not focus on beating up vendors over administration fees and stop loss premiums. No, they all understand that self-funding is about control. They understand that to control costs, you must control claims. If controlling claims does not have an important role within your road map you could be in for trouble. Seventy percent to 80 percent of your overall costs reside here, so claims-focused strategies are a must. The best strategies focus on changing how the health care services are purchased. With that in mind, let’s look at three strategies that will have your self-funded vehicle speeding to success.