Self-Insured Employer Health Plans: Prevalence, Profile, Provisions, and Premiums

Health Affairs

Volumn 15, Issue 2, 1996, Pages

  Acs, Gregory ^a   Long, Stephen H ^b   Marquis, M Susan ^b   Short, Pamela Farley ^b  

^a URBAN INSTITUTE   (United States)

^b RAND CORPORATION   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

ADULT; ARTICLE; ECONOMICS; FEMALE; HEALTH INSURANCE; HUMAN; INSURANCE; LEGAL ASPECT; MALE; MIDDLE AGED; STATISTICS; UNITED STATES; WORKPLACE;

ADULT; FEMALE; HEALTH BENEFIT PLANS, EMPLOYEE; HUMANS; INSURANCE BENEFITS; MALE; MIDDLE AGED; UNITED STATES; WORKPLACE;

EID: 1542639517     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.15.2.266     Document Type: Article

References (16)

1. G.L. Atkins and K. Bass, ERISA Preemption, The Key to Market Innovation in Health Care (Washington: Corporate Health Care Coalition, 1995).
2. P.A. Butler, Roadblock to Reform: ERISA Implications for State Health Care Initiatives (Washington: National Governors' Association, 1994).
3. However, a recent U.S. Supreme Court decision held that ERISA does not preempt state laws that only indirectly impose costs on self-insured plans, thus opening the door for some financing schemes that states have been hesitant to pursue. See P.A. Butler, Recent ERISA Developments: Implications of the Travelers Case for State Health Policy Initiatives, Issue Brief (Washington: National Governors' Association, 1995).
4. C.B. Sullivan et al., "Employer-Sponsored Health Insurance in 1991," Health Affairs (Winter 1992): 172-185. Tabulations based on the HIAA survey use employee-level weights and reflect only valid responses to survey questions. That is, we assumed that any nonresponse to specific survey items is random, and we calculated ratios and averages using only nonmissing information.
5. The states are Colorado, Florida, Minnesota, New Mexico, New York, North Dakota, Oklahoma, Oregon, Vermont, and Washington.
6. J.C. Cantor, S.H. Long, and M.S. Marquis, "Private Employment-Based Health Insurance in Ten States," Health Affairs (Summer 1995): 199-211. Response rates varied by establishment size and state; however, the results reported here are weighted to adjust for this differential nonresponse. The unit interviewed was the establishment; however, here we classify employers and workers by the size of the firm, not the establishment, for comparison with the HIAA and NMES results.
7. The respondent's report was used to classify plans as self-insured or fully insured. Reinsurance and its extent was not taken into account. For example, a reinsurance policy that pays when claims exceed $1,000 may be called "self-insured with reinsurance" by a business that seeks exemption from state regulation under ERISA, while state regulators would view the reinsurance policy as primary coverage.
8. The HIAA survey limited questions about plan characteristics to the largest plan offered among four different types (conventional, HMO, PPO, and point-of-service). Thus, if the self-insured plan was not the largest of its type, we might undercount the number of employees in self-insured firms. On the other hand, we may overstate enrollment in other firms. We attribute all of the enrollment for a particular type of plan to the largest plan of that type. Thus, enrollment in a self-insured plan would be overstated if the employer offered a smaller but fully insured plan of the same type.
9. C. Emmons and C. Hill, Questionnaires and Data Collection Methods for the Health Insurance Plans Survey, NMES Methods 5, AHCPR Pub. no. 94-0016 (Rockville, Md.: Agency for Health Care Policy and Research, 1994).
10. NMES estimates show this population at 5.4 million. Only 11 percent hold an employment-based policy, so their omission will have little effect on our estimates. See A.C. Monheit and P.H. Harvey, "Sources of Health Insurance for the Self-Employed: Does Differential Taxation Make a Difference?" Inquiry (Fall 1993): 293-305.
11. Dependents and retirees account for a somewhat higher proportion of the total enrollment in self-insured plans than in fully insured plans, based on NMES tabulations not shown here. Thus, self-insured plans encompass a larger share of the covered lives in employer-sponsored plans (47 percent) than their share of active workers.
12. For example, see G.A. Jensen, K.D. Cotter, and M.A. Morrisey, "State Insurance Regulation and Employers' Decisions to Self-Insure," Journal of Risk and Insurance (June 1995): 185-213.
13. The similarity of demographic characteristics extends to all enrollees-active workers, dependents, and former workers-based on NMES tabulations not shown here.
14. Deductibles and out-of-pocket maximums for employees in self-insured plans are lower than those for workers in fully insured indemnity and PPO plans. Those in self-insured plans are more likely to have coverage for special services such as prescription drugs and dental care. Our survey data do not reveal differences in administrative practices that deny coverage under special circumstances. In cases of dispute, consumers have recourse to state insurance regulatory processes when covered by a fully insured plan, but there is no corresponding relief under self-insured plans.
15. "Premiums" for self-insured plans are difficult to measure because there is not an observed transaction between the employer and the insurer. Surveys use different approaches to measure these premiums. The RWJF survey asked respondents to report a premium equivalent. The premium equivalent includes administrative costs. The administrative cost is imputed for self-insured plans that report a premium equivalent that reflects only claims payment. The HIAA premiums for self-insured plans are based on the subset of plans for which employers regularly put aside monthly allotments. Administrative costs are included if they are part of this allotment. The NMES premiums were imputed from the total funding (including administrative costs) of self-insured plans that provided this information.
16. Jensen et al., "State Insurance Regulation."