Nearly 90% of health benefit brokers and consultants with experience in both fully insured and self-funded plan design acknowledge the long-term benefits of self-funded insurance and do not feel that working with large insurance carriers is in the best interest of their clients, according to a survey from WellNet.
The “WellNet Self-Insured Survey,” fielded in collaboration with Daily Insurance Report among more than 275 brokers and consultants, also revealed that 98% said self-funding is in best interest of customers’ long-term strategy. “We hear from fully insured clients a frustration over premium cost increases and no data to show that the increase is warranted,” Veronica Verona, a partner at All Atlantic Benefits, said during a WellNet webcast about the survey findings. “We believe self-insured is best for the long term. Employers can have claims data and can take action that results in savings. If they have a component of benefits that is not working, they can carve it out and replace it. Year over year, self-insured employers can make small changes to improve cost savings, rather than a total do-over with fully insured benefits.”
Robert Wheeler, principal at The Carlyle Group, expressed similar benefits of self-insurance. “Not only is there the structural cost savings self-funding provides, but it offers access to data, flexibility on plan design and contributions, and employers can carve out prescription drug programs to cut costs,” he said.
Christopher Ourisman, president of Ourisman Automotive, said his company had used fully insured health benefits for years until it moved to self-insuring benefits three or four years ago. “Having access to information about the health of our employee population allows us to take proactive measures to manage employees’ needs,” he said. “We’ve not been able to find that in the fully insured market.”
What It Would Take for Employers to Make the Move
One could certainly see the attractiveness of fully insured health benefits—employers know their set costs each month and can budget for them, and the responsibility for administration and paying claims is handed over to insurance carriers. However, with increasing health benefits costs and following employer requirements passed under the Patient Protection and Affordable Care Act (ACA), more employers have been looking to self-fund their benefits to save money.
More than half (52%) of the brokers and consultants surveyed by WellNet said the biggest challenge of getting employers to move from fully insured health benefits to self-insured benefits is the fear of change. Ourisman told webcast attendees, “In my experience, fear of change comes from a history of fear-based selling. ‘You’re heading toward doom, come and find out why’ is sometimes the language of fully insured sellers about self-funding health benefits.”
He said it wasn’t until a consultant asked him what he was afraid of and explained why his fears were unwarranted and how self-insured plans work that it became clear to him what the benefits and risks are. “We stuck with fully insured benefits for the worst reason—just because it’s what we had done, what we were used to, what we were comfortable with,” Ourisman said.
Wheeler agreed that the most common challenge to get companies to do what’s in their best interest is the fear-based selling of brokers. “There are incentives for brokers to keep companies fully insured, but in the long term, a broker is better off if the client’s best interest is at heart and is met,” he said.
The WellNet survey found 52% of employers remain fully insured because of the perception there is too much risk to their company to be self-insured. Twenty-two percent remain fully insured because of the perception their company can’t tolerate volatility in health benefit claims and 20% do so because of the perception that their company is too small to move to self-funding.
Verona said the responsibility falls on brokers to educate employers. “There’s a lot of misinformation out there,” she added. She said education and help with structuring a self-insured plan will help alleviate employers’ concerns.
“Every employer has a budget. They have to be able to manage claims and costs year over year,” Verona said. “Having a benefit employees can understand along with a strong plan third-party administrator [TPA] can help employees with decisions about care. The TPA can maybe offer a physical wellness program to improve employee health. TPAs can also take actions; if it sees a claim for a high-cost drug that it knows will cost less through mail order, it can reach out to the employee.”
Verona added that, often, the way All Atlantic Benefits’ brokers transition clients to self-funded plans is to first review data with employers to show them how their employees are using health care. Wheeler said there is an opportunity for brokers to refine the evaluation approach comparing fully insured and self-funded benefits using claims data.
“The decisionmaker has to care enough to make the move,” Ourisman said. “HR [human resources] staff need to have a genuine, authentic discussion with decisionmaker(s) about a real needs analysis and answers or solutions.” He added that cost is the gateway for decisionmakers. “Costs being equal, if we can provide a better benefit for employees, we will do so.”
The WellNet survey found the top concerns for C-suite executives when making group health plan decisions were cost (96%), service and responsiveness of the plan administrator (62%) and employee resistance (50%).
“Getting health benefits needs on the C-suite’s radar in the first place is imperative to get to the right answer,” Wheeler said. “It’s important to get the C-suite to understand HR’s perspective.”
“One of the best ways to save money with a self-insured plan is to partner it with lower-cost health care providers,” Verona said. “Employers tend to be hesitant in the beginning because they don’t want employees to think their employer is taking away something and controlling decisions, but employers need to show how they are not taking anything away, but giving something instead. Education and using incentives to encourage the use of lower-cost health care providers are ways to do this.”
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