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Self-Insured Industry to Grow in Wake of Healthcare Reform
Employers weigh the difficulties of grandfathering their employee health plans under new federal guidelines versus the opportunities of self-insurance. The self-funded marketplace could win.
By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance® CHICAGO---After fearing and lobbying against federal health reform, the industry that caters to self-funding employers might actually experience new, profitable opportunities thanks to the Patient Protection and Affordable Care Act (PPACA). In part, it's because the uncertainty and higher costs that employers are feeling with their employee health benefits could push more of them to some form of self-insurance.
"I think there's going to be some opportunities," he said, explaining that perhaps midsize and smaller employers that currently purchase health insurance could instead turn toward self-insurance. Opportunities could come about simply because the status quo might become unbearable or impossible for employers. Employers could be finding the process of grandfathering in their current benefits plan under the new law like having "tied their hands" in terms of plan design and cost-savings, as Mark T. Hopkins, senior director of compensation and benefits at manufacturer Mohawk Industries Inc., found. "We basically threw grandfathering out the window," Hopkins said. It could seem like a big hassle to have to completely rethink and redesign benefit programs. On the other hand, employers could take the sunny-side approach and view healthcare reform as a one-time opportunity, as Jay Anliker, president and CEO of third-party administrator UMR, put it. This could especially be the case for smaller and midsize employers who maybe never considered self-insurance. What's more, benefit brokers are reporting that health carriers are reducing or eliminating their commission schedules to meet the requirements of the minimum loss ratios in PPACA, said Jerry Castelloe, regional president of independent benefits administrator CoreSource Inc. Independent TPAs and other vendors in the self-insurance could see more resulting business because brokers and consultants had typically taken business to the health insurers and their subsidiaries. For these healthcare TPAs, new business might also come out of administering the state-based insurance exchanges or accountable care organizations, said Paul Lotharius, president and CEO of CoreSource. The latter are the networks of healthcare providers who agree to be accountable for the quality, cost and overall care of Medicare beneficiaries, a system that PPACA encourages. Perhaps the dizzying buzz of opportunity and uncertainty around healthcare reform was best illustrated by the record crowd of about 1,700 that SIIA drew to Chicago, where sessions overflowed and the lobby hummed with deal-making. Expect the action to heat up as the specifics of PPACA become clearer closer to the big 2014 date, when many of the major provisions of the reform go into effect, such as the individual insurance mandate, the exchanges and the employer penalties. The country's largest employers appear to be holding their breath for that clarity. By his estimates, Joe Plumeri, chairman and CEO of Willis and keynote speaker at SIIA, finds about 98 percent of Willis clients are not doing anything about healthcare reform yet because they don't understand it. October 18, 2010 Copyright 2010© LRP Publications |
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