Employers are increasingly turning to the self-insured model of healthcare out of frustration with traditional insurance — but they need to stop and think before diving in, an expert says.
To combat employers’ growing financial responsibility, companies are switching to
“Traditional insurance has just gotten so expensive for any size [employer,]” says Anne Brunson, vice president of service operations at Maestro Health. “Add a pandemic and it only gets worse; costs spread over all those people regardless of COVID incidents.”
Maestro Health is a third-party provider that manages self-insured health plans for employers. In a recent interview, Brunson shared how employers can determine whether the self-insured healthcare model is right for their workforce and which features they should look for in a provider.
How do self-funded plans differ from traditional insurance?
Traditional insurance is a shared cost model, which could benefit a plan if they have a lot of sick or ill people. The insurance companies are going to increase their rates every year to cover their costs — they’re not in the business of losing money.
But in the self-funded space, you’re paying for the claims your employees and their dependents incur and service processing — so you’re paying for what you need, not what might happen. Yes, you’re absorbing some of the risk, but you can mitigate that through a stop loss policy.
Also, most traditional health insurance won’t share healthcare data with their employers, whereas, in self-funded plans the data belongs to you. The data is HIPAA compliant, you won’t be able to see what your employees’ health problems are. However, you’ll get a snapshot of your entire workforce, which can help steer you to wellness plans your employees need.
Does this model help reduce spending for employers of all sizes?
It can for many different employers, but if you have a large population of very sick people, then it won’t necessarily be cheaper for you — you might break even. But employers who actively engage their employees with wellness programs tend to perform the best with self-funded programs, because they’re focused on improving the health of their employees.
Do employers lose access to providers through self-insured models?
Not at all. Some can be limited, but many self-insured providers contract with popular health systems and PBMs to deliver care. Employers just need to work with their broker to find someone who can offer them the services they want.
Which features should employers look for in a self-insured program?
Pick a partner that’s truly going to be a partner, someone who can help educate your employees when they have questions about their plan. There are some providers that specialize in that, but not all of them have that arm. You should also find someone who is willing to give you your data on a regular basis and partner with you to make the plan as efficient as it can be.
Your broker should be able to help you find a provider that will work with you on an annual basis to review the plan, your overall costs, PBM options and methods to reduce costs. If you’re not having those conversations, you might want to start looking for somebody who will do that with you. You are paying your broker, so make them work for it.
