Establishing an Analytical Framework for Measuring the Role of Reinsurance in the Health Insurance Market. 3. Self-funded Employers


Unlike the information about reinsurance arrangements by indemnity insures and HMOs, which is best collected from insurers, employers are the most logical source of information about self-funded employer stoploss arrangements and minimum premium plans, although the insurance industry is a potential source of information if reliable data cannot be collected from employers.

One advantage of collecting this information through employers is that comparisons can be made between employers that use stoploss and those that do not. There also are a number of existing surveys that gather information from employers about their health benefit arrangements (including if they are self-funded), providing a number of potential avenues for securing additional details about excess of loss arrangements in this market.

One option for collecting the additional information is the Employee Benefits Survey (EBS) conducted by the Bureau of Labor Statistics. The EBS is designed mainly to collect information on the benefits that employers provide to their employees. In the past, BLS has attempted to collect some information on stoploss arrangements (they use the term minimum premium plans for any split risk arrangement), but they ceased doing so because of concerns about data reliability. BLS is currently in the process of a series of major survey redesigns, in which three major surveys (the EBS, along with the Employment Cost Index and the Occupational Compensation Survey Program) will be combined into a single survey known as Comp2000. BLS staff are in the process of selecting items to field test for inclusion in Comp2000, and have indicated they may be willing to test items related to stoploss.

Reliability and response burdens are likely to be the chief concerns with any attempt to collect detailed information on stoploss coverage or minimum premium plans through employers. To collect the information, the respondent, or the data collection analyst conducting the survey in the field, would likely need to consult records of the stoploss or minimum premium transaction. For reliability, the surveyor may need to confirm the information with additional staff at the respondent firm or with an insurer or insurance broker. BLS officials raised the concern that this could put a substantial burden on survey respondents and also could significantly increase survey costs.

If information cannot be collected from employers, another option would be to attempt to collect some of it from insurers. The NAIC annual statement could be amended to have insurers provide information on the aggregate level of stoploss and minimum premium plan coverage and the number of employers covered. Collecting details through the NAIC reporting form about the risk allocation in these arrangements would not seem to make sense because there are far too many of them, and presenting the information in this fashion would be a large burden on insurers. All of the potential objections discussed above to using the NAIC annual statements to collect this type of information are applicable here.