Smaller companies self-insure

Health insurance trends happening now:
Self-funded insurance and other news


Large companies with more than 5,000 employees are a common feature of the self-funded health plan market. However, small and mid-size firms across the country are increasingly turning to self-insurance to reduce healthcare costs, reports

In fact, the percentage of employers with fewer than 1,000 plan members that self-insure has grown from 29 percent in 2008 to 48 percent in 2010, according to PricewaterhouseCoopers (PwC). “The reality is that companies with below 1,000 lives do experience more fluctuation [in cost] than [larger] ones,” Michael Thompson, a principal in PwC’s human-resource services group, told “But insurance companies don’t necessarily protect them any better, because they just base their rates on their past experience.”

Many employers may be getting the impression that fully insured health plans don’t protect them at all. Case in point: In May, the city of Temple, Texas, received proposals for its fully insured health plan that included cost increases ranging from 46 percent to 103 percent. So this Oct. 1, Temple will transition to a self-funded health plan, as well as providing stop-loss insurance, according to a press release. Temple expects the self-funded approach to bring “more transparency in our utilization and costs, and save a lot of money,” said City Manager David Blackburn.