Researchers compared the characteristics of firms that chose to self-insure and those that chose to fully-insure their group health plans. Researchers examined the factors that appeared to influence firms' decisions to select a particular method of funding health plans, and determined the extent to which new insurance market reforms are likely to cause adverse selection in the large group market or to encourage small and midsize employers to self-insure.
Larger employers are much more likely to offer a self-insured plan than are smaller employers, with employers in industries like healthcare, manufacturing, transportation, utilities, and communication more likely to self-insure, and those less likely to self-insure in retail and the agriculture, mining, and construction industries. The research observed similar premiums across self and fully-insured health plans for most firm sizes and plan types. Additionally, the study finds little difference in plan generosity between self-insured and fully-insured plans when comparing plans of the same size and concludes with no evidence of systematically lower or higher out-of-pocket payments at self-insured firms compared with fully-insured firms. The research findings suggest that there will be little change in self-insurance rates after the Affordable Care Act's insurance market reforms are fully implemented in 2014, although the results are sensitive to the assumptions made about the availability of attractively priced reinsurance providing coverage beginning at low levels of stop-loss.
Report Title: Large Group Market Study http://aspe.hhs.gov/health/reports/2011/lghpstudy/index.shtml
Agency Sponsor: OASPE-OHP, Office of Health Policy
Federal Contact: Thomas Musco, 202-690-7272
Record ID: 9751 (Report issued June 1, 2011)