It’s one thing to read about self-funding. But it ’s another to know there’s proof that gives you the “gut level” certainty that self-funding’s advantages are real.
If you’re thinking about self-funding, you might be reassured by this list of three ways to know that self-funding savings are for real.
Wisconsin is aiming to move state employees to a self-funded health plan. The state’s decision focuses on these important benefits of self-funding*:
- Control: The state will become the owner of detailed claims data to manage its program and make data-driven decisions. This allows them to buy not just more health care, but more health for employees and dependents. Improving disease management and quality of care are two goals for the state.
- Cost: By self-funding, the state says it will achieve “concrete savings” based on actual bids, rather than being at the mercy of an annual negotiation process. Gov. Scott Walker’s proposed two-year budget includes $60 million in savings from self-funding, according to a Wisconsin State Journal article on Feb. 9, 2017. It’s a fact: well-managed self-funded health benefits save money, as a representative of the Self-Insurance Institute of America recently testified to the U.S. Congress.
As a bit of background, The Alliance did not bid on the state plan. We are focusing our business model on the needs of the more than 240 businesses and multi-employer funds (including Taft-Hartley plans) that own our cooperative. But we think it’s worth noting that the state’s self-funding decision is based on the same factors that motivate employers to join The Alliance.
The 2017 Marketplace Realities Report from Willis Towers Watson forecasts rate increases of 4.5 percent to 5.5 percent for self-insured plans. In comparison, fully insured plans are expected to have rate increases of 7.2 percent to 8.2 percent in the coming year.
While that’s still higher than overall inflation, it shows that self-funding can be a valuable tool for employers seeking to use self-funding to lower the trend of medical spending increases.
Employers benefit from the flexibility of self-funding, which lets them make the right decisions for their employees on issues like premiums, deductibles and co-pays.
The Alliance also links its members to partners like National CooperativeRx to help control the cost of prescription medications. That’s important, because another Willis Towers Watson study said that managing pharmacy costs and specialty drugs is the “top priority” for 88 percent of employers in the next three years.
When you decide to self-fund, you’re joining a growing group of employers. Sixty percent of private-sector health plan enrollees are served by self-insured plans, according to an Employee Benefits Research Institute review of self-insurance trends published in July 2016.
The report noted that as of 2015, 39 percent of private-sector employers self-insured at least one health plan. That’s an increase of 36.8 percent from 1996, when it was used by 28.5 percent of employers.
Self-funding’s popularity increases with the employer’s size.
Looking for more information about self-funding results? Check out this Investor’s Business Daily story about how businesses used self-funding to spend less on health benefits.
Connect with Self-funded Employers
If you’re pondering self-funding, it can be reassuring to talk with other self-funded employers. Six times a year, The Alliance sponsors educational events for its members featuring national speakers. In 2017, for the first time, The Alliance is opening these events to C-suite and benefit leaders that represent employers and multi-employer plans throughout Wisconsin, northern Illinois and northeastern Iowa.
These events include networking breaks to help you connect with other employers facing the same challenges. Learn more about our events or give me a call to talk about how you can connect with employers willing to share their self-funded experience.
- Diving into the Details: Captive Comparison, Analysis & Value - June 5, 2018
- What’s Your Risk Appetite? - May 22, 2018
- Capturing Medical Stop-Loss Savings with ShareCap™ - February 27, 2018