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MyHealthGuide Source: 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)
Editor’s Note: In the 5/31/2011 edition of this Newsletter, it was reported that the RAND Study showed, “No Major Differences in Benefit Generosity Between Self-insured and Fully Insured Plans’ Finding From Employer Self-Insurance Decisions and the Implications of PPACA”. RAND cited several sources from the self-funded community including,
- Chief Operating Officer Self-Insurance Institute of America
- Manager, Government Relations Self-Insurance Institute of America
- Senior Vice President HCC Life (stop-loss insurer)
- Senior Officer CoreSource (TPA)
This second Newsletter article invites readers to review other aspects of the RAND study that are valuable.
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.
In addition, the consequences of self-insurance are analyzed, focusing on adverse selection in the non-self-insured small-group market and effects on consumers.
Below is the Table of Contents revealing a rich source of data.
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) |
TABLE OF CONTENTS
(Listing Selected for Interest to Self-Funded Community) |
Chapter One
- The Patient Protection and Affordable Care Act
- What Is Self-Insurance?
Chapter Two
- Factors Influencing Employers’ Decisions to Self-Insure
- Regulatory Environment
- Financial Risk
- Prices for Administrative Services in Self-Insured and Fully Insured Plans
- Other Factors Influencing Employers’ Decisions to Self-Insure or Fully Insure
Chapter Three
- Prevalence of Self-Insurance and Characteristics of Self-Insured Firms
- Prevalence of Self-Insurance
- Characteristics of Firms That Self-Insure
Chapter Four
- Financial Solvency of Self-Insured Firms
- Employer Solvency
- Stop-Loss Insurer Solvency
Chapter Five
- Health Benefits and Costs in Self-Insured Plans
- Comparison of Actuarial Values of Self-Insured and Fully Insured Health Plans
- Premiums for Self-Insured and Fully Insured Health Plans
- Differences over Time in Benefit Fluctuations of Self-Insured and Fully Insured Health Plans
- Employer Self-Insurance Decisions and the Implications of the Patient Protection and Affordable Care Act
Chapter Six
- Claims Denials
- Conflicts of Interest in Claims Adjudication
- Claims Denial Rates
Chapter Seven
- Consumer Recourse Options
- Federal Laws Affecting Consumer Recourse
- Pre-ACA Internal Appeals of Denied Claims
- New ACA Rules for Internal Appeals
- Pre-ACA External Review Requirements
- Pre-ACA Data on External Appeals
- New ACA Rules for External Appeals
- Litigation Options for Employer-Sponsored Plans
- Stakeholder Concerns About Recourse Options
Chapter Eight
- The Impact of the ACA on Employer Decisions to Self-Insure
- How Does the ACA Influence the Self-Insurance Decision?
- Modeling the Decision to Self-Insure
- Overview of the COMPARE Model
- Stop-Loss Assumptions
- Essential Health Benefits
- Additional Assumptions
- COMPARE Model Predictions, Self-Insurance
- Adverse Selection in the Non-Self-Insured Market
- Comparison of Model Predictions, Adverse Selection
- Discussion of Model Results
Chapter Nine
- Discussion and Future Implications
Appendix
- A. Analysis of Kaiser/HRET Data: Methodology
- B. Qualitative Methods
Figures
- Probability That Actual Health Care Expenditures Exceed 125 Percent of Expected
Expenditures, by Firm Size
- Percentage of Firms Offering a Self-Insured Health Plan, by Firm Size (2006–2010)
- Share of Enrollment in Self-Insured Health Plans, by Firm Size (2006–2010)
- he ROC Curve for the Firm Decision Between Not Offering Health Insurance and Offering Any Health Insurance and the ROC Curve for the Decision Between Fully Insured and Self-Insured Plans
- Risk Associated with Each Stop-Loss Scenario, by Firm Size
- Percentage of Firms Offering a Self-Insured Health Plan and Share of Enrollment in Self-Insured Plans
Tables
- Percentage of Firms Offering a Self-Insured Health Plan in 2010, by Firm Size
- Self-Funding Among Firms, by Region and Industry (2006–2010)
- Odds Ratios for Firm Characteristics and Self-Funding, by Firm Size: Results from Multivariate Logistic Regression Analyses
- Self-Funding and Actuarial Value of Health Plans Offered by Employers: Results from Multivariate Regression Analyses
- Influence of Self-Funding on Health Plan Premiums: Results from Multivariate Regression Analyses
- Self-Funding and Changes in Health Plan Benefit Generosity Over Time: Results from Multivariate Regression Analyses
- Summary of Consumer Recourse Options Under State and Federal Law
- Stop-Loss Scenarios
- Predicted Self-Insurance Rates Under Alternative Assumptions About Stop-Loss Coverage
- Predicted Self-Insurance Rates, Alternative Assumptions About EHB
- Effect of Self-Insurance on Enrollment Under Alternative Assumptions About EHB
- Stop-Loss Adjusted Risk Variables for Representative Firm Sizes
- Effect of Self-Insurance on Small-Group Premiums in the Low-Risk Stop-Loss Scenario
- Effect of Self-Insurance on Enrollment Among the Non-Elderly, Low-Risk Stop-Loss Scenario
- Effect of Self-Insurance on Firm Health Insurance Offer Rates
- Titles and Organizations of Interview Participants
Decision to Self-Insure
- Model with Regional Economic Indicators, Multivariate Regression Results
- Mean Actuarial Value of Employer-Offered Health Plans, by Firm Size, Plan Type, and Self-Insured versus Fully Insured Plan: Descriptive Statistics
- Actuarial Values in Self-Insured versus Fully Insured Plans: Multivariate Regression Results
- Differences in Benefits in Self-Insured Plans Relative to Fully Insured Plans: Results from Multivariate Regression Analyses
- Comparison of Wellness Plan Offerings of Self-Insured and Fully Insured Plans: Percentage of Firms Offering Three or More Wellness Plans, Descriptive Statistics
- Employer Self-Insurance Decisions and the Implications of the Patient Protection and Affordable Care Act
- Wellness Plan Offerings in Self-Insured versus Fully Insured Plans: Multivariate Regression Results
- Premiums in Health Plans Offered by Employers, by Firm Size, Plan Type, and Self-Insured versus Fully Insured: Descriptive Statistics
- Premiums in Self-Insured versus Fully Insured Plans: Multivariate Regression Results
- Changes in Actuarial Values of Self-Insured versus Fully Insured Plans: Multivariate Regression Results
- Change in Scope of Health Benefits or Increased Cost Sharing in Response to an Economic Downturn in Self-Insured versus Fully Insured Plans: Regression Results
Statistics
- Mean, Standard Deviation, and 10th and 90th Percentiles of the Posterior Distribution of the Coefficients of the Multinomial Probit Used in the Simulation
- The Area Under the ROC Curve for Two Binary Decisions: Not Offering Health Insurance versus Offering Any Health Insurance and Offering a Fully Insured Plan versus a Self-Insured Plan
- The Elasticities of Firms’ Demand for Health Insurance, by Firm Size
- Comparison of COMPARE Self-Insurance Predictions with Kaiser/HRET Estimates
- Administrative Load and Actuarial Values, Outside of the Exchange
- Stop-Loss Scenarios
- Dollarized Risk for Selected Firm Sizes
- Estimates of the Cumulative Percentage of Employees Whose Plans Lose Grandfathered Status, 2011–2016
- Estimates of the Elasticity of Demand for Prescription Drug and Mental Health Services
- Average Estimated Coinsurance Rates for Employer-Sponsored Insurance
- Average Changes in Utility Due to Dropping the Prescription Drug Benefit
- Average Changes in Utility Due to Dropping the Mental Health Benefit
|
| |
The RAND Study examines the factors that motivate employers’ decisions to self-insure and the ways incentives to self-insure might change after the ACA takes full effect. It also considers the consequences of self-insurance for enrollees in terms of benefit design, the probability of claims denial, financial risk, and recourse options in the event of denied claims. It investigates how xii Employer Self-Insurance Decisions and the Implications of the Patient Protection and Affordable Care Act self-insurance influences employer solvency and whether self-insurance could lead to conflicts of interest between employers and their workers.
RAND use the COMPARE micro-simulation model to predict changes in employer self-insurance rates after the ACA takes full effect and to estimate the degree to which adverse selection might occur due to new regulations in the small-group market. The analysis is based on a combination of methods, including primary data analysis, literature review, discussions with stakeholders, and simulation modeling. The report addresses the congressionally mandated research questions raised in section 1254 of the ACA.
Key Findings
- There is little evidence that self-insured plans differ systematically from fully insured plans in terms of benefit generosity, price, or claims denial rates.
- While self-funding is perceived to be less expensive for firms than purchasing a fully insured product, employers that self-insure face higher financial risk. This risk can be mitigated by purchasing stop-loss insurance policies, which are regulated differently from fully insured health insurance products.
- Stakeholders, including industry experts, consumer advocates, and regulators, remarked that self-insurance may leave consumers less financially protected in the event that their employers declare bankruptcy or face financial trouble.
- Although data are limited, we found no evidence that claims denial rates are higher for self- insured firms.
- Stakeholders expressed significant concern about adverse selection in the health insurance exchanges due to regulatory exemptions for self-insured plans. However, the COMPARE micro-simulation model predicts a sizable increase in self-insurance only if comprehensive stop-loss policies become widely available after the ACA takes full effect, and the expected cost of self-insuring with stop-loss is comparable to the cost of being fully insured in a market without rating regulations.
- In scenarios where comprehensive stop-loss coverage is assumed to be available, increases in self-insurance are associated with slightly higher premiums on the exchanges. For example, for firms with 100 or fewer workers, the option to self-insure with comprehensive stop-loss coverage would result in a 3.3 percent increase in platinum-plan premiums.
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on Monday, July 25th, 2011 at 9:28 am and is filed under PPACA, Self-Funding.
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