Cut Costs, Not Benefits: Why Public Employers are Rethinking Their Benefit Plans

A robust benefits package is crucial for attracting and retaining employees. This is especially true for public employers, like school districts and municipalities. These employers need to compete with private-sector employers for teachers, administrators, and essential public workers. However, rising healthcare costs make it increasingly challenging for public employers to maintain comprehensive benefits while staying within budget. In fact, nearly 70% of public employers cite the cost of health benefits as a major challenge in maintaining workforce competitiveness 

Self-funding offers a powerful solution. Rather than paying fixed premiums to an insurance carrier, self-funded employers pay healthcare claims as they happen. This approach gives public employers greater flexibility and control over healthcare spending. This can lead to significant savings and better outcomes for employees and their families.  

The Value of Data and Transparency

One of the biggest advantages of self-funding is having access to detailed claims data. Unlike fully insured plans where employers get limited information about how their healthcare dollars are being spent, self-funded employers get full visibility into claims. This allows them to identify trends, target high-cost areas, and make data-driven decisions to improve their benefit plan design. 

With our Smarter Health^SM analysis, employers receive a customized report that highlights savings opportunities through targeted steerage and incentive recommendations. 

The Alliance gives employers the data and resources they need to help their employees become smarter healthcare consumers. For example, our Better Healthcare Consumer packet helps employers educate their employees on how to make choices that save them money and improve their health. Current employer-members of The Alliance can contact their Account Executive for access to this resource.  

Steering Toward High-Value Care

In a self-funded model, public employers can design benefit plans that incentivize employees to choose high-value healthcare. This might include tiered networks, with lower copays for Preferred-Value Providers, or financial incentives for selecting certain facilities or services. 

Many employees assume that higher-cost providers offer better care, but that isn’t true. According to RAND Corporation’s Hospital Price Transparency study, 60% of medium-priced hospitals received four or five stars for quality. This highlights the importance of educating employees on the fact that lower-cost options can deliver excellent care. 

By partnering with a network like The Alliance, public employers can highlight high-value healthcare options and help employees make informed decisions. Incentivizing high-value care not only lowers overall costs but also promotes better health outcomes. 

The Savings Potential

Public employers can save money and improve care outcomes by guiding employees to lower-cost providers for common services like imaging, lab work, and elective surgeries. These types of care often have big price differences, even between in-network providers. By shifting care to providers who deliver great care at lower-costs, employers can reduce healthcare costs by 8% to 14% without sacrificing quality or even improving it.  

One school district saved $18 million in the last eight years by moving to a self-funded plan and steering their employees to high-value healthcare through The Alliance network. Those savings are now being reinvested in what matters most, higher wages, wellness programs, facility upgrades, and other important resources for staff and students.  

Benefits Beyond Cost Savings 

Self-funding doesn’t just save money; it also empowers public employers to design benefit plans that align with their organizational values and priorities. For example, school districts and municipalities can: 

Watch this video to learn more about how school districts can save with self-funding:

Overcoming Concerns

While self-funding offers clear advantages, employers sometimes hesitate due to perceived risks. Concerns often include financial unpredictability and potential pushback from employees accustomed to traditional insurance. 

These concerns can be addressed with thoughtful planning and the right partners. Stop-loss insurance can manage financial risk, and working with experienced partners like The Alliance can simplify administration and communication. Transparent, frequent communication with employees helps them understand the benefits of the new plan design and the shared value it creates. 

Start Your Journey

The future of public employer healthcare is shifting toward more sustainable, value-driven models. Self-funding allows school districts, municipalities, and other public employers to break free from the constraints of traditional insurance and create benefit programs that truly work for their employees and communities. 

Imagine what your organization could do with millions of dollars in healthcare savings. By empowering employees to be smarter healthcare consumers and focusing on high-value healthcare, you can transform your benefits from a growing expense into a strategic asset that strengthens your workforce and your organization.  

Ready to explore self-funding for your public organization? The Alliance can guide you every step of the way.  

Connect with us to learn how you can take charge of your healthcare costs and unlock serious savings for your employees and your mission.