Government Study Shows Self-Funded Health Plans Are Less Expensive
MyHealthGuide Source:
• Employee Benefit Management Services, Inc. (EBMS) 2011 Health & Business Symposium, 7/28/2011, www.EBMS.com
• Adam Russo, Esq., The Phia Group, LLC, 7/28/2011, www.phiagroup.com
• RAND Corporation, Study sponsored by the U.S. Department of Labor, RAND Study: Employer Self-Insurance Decisions and the Implications of the Patient Protection and Affordable Care Act as Modified by the Health Care and Education Reconciliation Act of 2010 (ACA)
“Health care reform is making self-funding an increasingly attractive way to insure employee health,” says Adam V. Russo, Esq., Co-Founder & CEO, The Phia Group, LLC, “…and the government sponsored the study that proves it!”Russo proclaimed the good news for self-funding at the annual Employee Benefit Management Services, Inc. (EBMS) 2011 Health & Business Symposium hosted by F. H. (Rick) Larson, Co-CEO and Nicki Larson, Co-CEO, in Billings Montana on July 28th. The Symposium brought together national thought leaders for an audience of more than 300 individuals from the self-funded community.
Sponsored by the U.S. Department of Labor, The RAND study uses literature review, data analyses, and qualitative methods to identify factors that will influence employers’ decisions to self-insure. The RAND COMPARE micro-simulation model is then adapted to estimate how the ACA will influence self-insurance decisions and to predict the share of firms that will self-insure.
“Reform has been imposing costs on insurers that will be passed on to employers,” continued Russo, “However, employers that self-fund can escape prescriptive reform mandates and gain flexibility in plan design, thereby avoiding some new costs.”
Study findings
• Workers at large employers (200 or more workers), workers in self-insured plans paid statistically significantly lower annual premiums.
• During the latter part of the decade there were larger premium increases for fully-insured plans,
o 35% from 2005 to 2010, versus
o 26% for self-insured plans over the same period
• From 2009 to 2010, average fully-insured premiums increased by $808 while average self-insured premiums increased by $248.80.
• Workers paid a larger share of their family coverage premiums when their plans were fully-insured,
o 36% versus
o 26% for self-insured plans.
“The Study reported very favorable findings for the self-funded community. In fact, it I were a TPA, I would make of the copy of the study and send it to every prospect I can find,” said Russo. “At large employers, fully-insured plans had higher premiums, faster premium growth, and workers paid a larger share of premiums compared to self-insured plans.”
Self-Funding Just as Generous as Fully-Insured Plans
• The study finds no statistically significant differences in plan generosity between self-insured and fully-insured plans.
• Claim denial rates are similar in the two types of products
• There was no perception of a greater conflict of interest in claims adjudication among self-insured than among fully-insured plans
“Interestingly, the study fails to address the fact that a fully-funded insurance carrier not only makes claim payment determinations, but also funds those claims with its own money,” adds Russo. “The study fails to address the fact that the health and wellbeing of the employees has no value to a fully funded insurance carrier.”
About Employee Benefit Management Services, Inc. (EBMS)
EBMS is a Third Party Administrator (TPA), specializing in the management and administration of self-funded, corporate employee benefit plans. EBMS was founded in 1980 when a local employer needed a claims administrator to accurately adjudicate claims and provide superior service to its covered employees and their dependents. Today, EBMS continues to assist this client and hundreds more in controlling benefit plan costs. Over the past twenty-five years, EBMS has created a system that provides cost effective plan management through integrated management programs. EBMS integrates each discipline-design, enrollment, claims administration, provider relations, regulatory compliance, consultation, and quality of care – to produce the most cost-efficient benefit administrative services in the marketplace today. Visit www.EBMS.com.
About The Phia Group, LLC
The Phia Group, LLC is an experienced provider of health care cost containment techniques offering comprehensive claims recovery, plan document and consulting services designed to control health care costs and protect plan assets. The Phia Group’s overall mission is to reduce the cost of plans through its recovery strategies, innovative technologies, legal expertise, and focused, flexible customer service. True to its motto “A Revolutionary Passion for Savings,” The Phia Group has become one of the most innovative and fastest growing cost containment firms in the nation, and is a pioneer setting the highest standards in the health care marketplace. Visit www.phiagroup.com.
About RAND
The RAND Corporation is a nonprofit institution that helps improve policy and decision-making through research and analysis. RANDs publications do not necessarily reflect the opinions of its research clients and sponsors. Visit www.RAND.org.
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