Cost-saving options such as self-insured health plans, high-deductible health plans, wellness programs and other measures just aren't bringing employers the kind of savings they expected. (Photo: Shutterstock)
Even as small employers are adopting self-insured health plans, large employers are exiting them, according to a new report from the Employee Benefit Research Institute.
The report, "Self-Insured Health Plans: Recent Trends by Firm Size, 1996‒2016," finds that the percentage of small employers—those with fewer than 100 employees—that offered self-insured plans increased from 14.2 percent in 2015 to 17.4 percent in 2016.
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However, reports HRDive, in the same year, the percentage of midsize employers with a self-insured plan fell from 30.1 percent to 29.2 percent, and large companies—those with 500 or more workers—that offered self-insured plans dropped from 80.4 percent to 78.5 percent during the same period.
Paul Fronstin, director of EBRI's Health Education and Research Program, is cited in the report saying that when the Affordable Care Act was passed in 2010, it was expected that the cost of health care would rise, and that led employers looking to cut costs to embrace them as a means to that end.
However, enrollment didn't bring expected results, with a drop from 2015's 60 percent to 57.8 percent in 2016, according to the research. And even though small employers have increasingly moved to self-insured plans, their employee population totals weren't enough to offset the much larger number of employees lost to self-insured plans from large employers.
As a result, the number of workers covered by self-insured plans has fallen overall.
According to the HRDive report, cost-saving options such as self-insured health plans, high-deductible health plans, wellness programs and other measures just aren't bringing employers the kind of savings they expected. It adds that many companies opted for self-insured plans because of the control over health expenditure data that such an arrangement allows.
Only the "best performing companies," says the report, managed to successfully contain costs through subsidization and plan design, and even then they had to use a multipronged approach to achieve success—such as evaluating pharmacy benefit contract terms and promoting the use of specialty generic drugs. Pharmaceutical costs continue to impair potential savings in many health care plans, as do complex medical procedures and treatments.
In their quest to achieve savings, large companies are now moving into another phase of attempted cost containment: direct employer intervention in the market, as embarked on by such companies as Apple, JPMorgan Chase, Amazon and Berkshire Hathaway. However, that action is still too undefined to offer projections on how well (or not) it might work.
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
