ACA Leading to More Self-Insured Health Plans

June 20, 2013 ( - Employers are self-insuring medical benefits more now than before passage of the Affordable Care Act (ACA), a survey finds.

Results from PwC’s annual “Touchstone Health and Well-Being” survey show while prevalent for employers with 1,000 or more employees, 31% of employers with  less than 500 employees are now self-insured (up from 22% in 2012) as are 55% of employers with 500 to 1,000 employees (up from 49% in 2012).This could be a reaction to the ACA, PwC contends.  

Mike Thompson, a principal in the PricewaterhouseCoopers Human Resource Services (HRS) practice and New York-metro health care leader for HRS, explained to PLANSPONSOR that there has always been a gap in the costs between self-insurance and insurance.“Historically, the two incremental costs for insurance most frequently cited are premium taxes (varies by state from 2% to 3%) and profit and risk charges (2% to 5%).Another traditional driver towards self-insurance is the influence of state benefit mandates,” he said.  

According to Thompson, the ACA is adding to that burden by assessing Health Insurance Industry Tax Assessments (HIT). These are assessed across the health insurance industry proportionate to premium market share.Since the insurers are passing those costs onto their insured customers, that is adding another 2% to 3% premium. “This is making the gap between self-insurance and insurance even wider, at 6% to 10%, and consequently, more mid-sized and small employers are expected to move in that direction,” he said.

The survey also found the average reported trend in health care costs before plan changes in 2012 was 7.5% and is projected to increase to 7.8% in 2013. These have been managed down through plan design changes to 5.3% and 5.4%, respectively. These increases are being shared with employees through increases in contributions and cost-sharing through plan designs (higher deductibles and out-of-pocket maximums).  

Preferred provider organization (PPO) plans are still the most prevalent plan designs for 54% of employers (down 3 percentage points from 2012), while high-deductible health plans (HDHPs) are now the most prevalent plan designs for 21% of employers (up 4 percentage points from 2012). Exclusive provider organization (EPO) plans are growing slightly from 2012, while health maintenance organization (HMO) plans are declining, and point-of-service (POS) plans are remaining constant. Overall, employers are offering fewer medical plan options—2.6 plans offered on average in 2013 versus 3.0 plans in 2012.  

The survey found the prevalence of wellness programs has decreased for mid-size employers (1,000 to 5,000 employees), and the prevalence of disease management programs has decreased for both mid-size and large employers (5,000 or more employees).  

According to PwC, the immediate future looks to be a continuation of current strategies:  


  • Cost sharing through plan design and contributions will continue to increase; 
  • Full replacement HDHPs are being considered by 44% of employers, while 17% have already implemented them; 
  • 53% of employers are considering implementing/improving wellness in the U.S., and 16% are considering implementing/improving wellness outside of the U.S.; 
  • 33% of employers are considering performance-based networks, and 43% are considering value-based plan designs; and 
  • Only 19% are considering direct contracting with providers. 



More information about the survey, including how to obtain a report, is at