Small and midsize employers’ efforts to start their own health plans have collided with regulatory and market reality.
The percentage of U.S. employers with fewer than 100 employees that self-insure at least one health plan fell to 16% in 2023, from 18% in 2022, according to an Employee Benefit Research Institute analysis based on federal government survey data.
For employers with 100 to 499 employees, the percentage with self-insured health plans fell to 32%, from 37%, EBRI says.
The self-insured percentage did increase for employers with 500 or more employees: It rose to 74%, from 72%.
Because large employers made more use of self-insurance, the percentage of employers with self-insured plans held steady at 38%.
What it means
Health insurers seem, based on EBRI’s analysis, to be holding on to a relatively steady share of the employer-sponsored health plan market.
The backdrop
A few years ago, some benefits consultants suggested that small and midsize employers could use self-insured plans to escape from the upheaval in the fully insured group health market caused by the onset of Affordable Care Act programs and rules.
The consultants helped small and midsize employers combine self-insured plans with stop-loss insurance, or insurance for health plans, with relatively low “attachment points,” or stop-loss insurance deductibles.
Some states feared the low-attachment-point stop-loss arrangements would hurt their small-group health insurance markets. They imposed laws and regulations discouraging sales of low-attachment point stop-loss arrangements.
The COVID-19 pandemic has caused turmoil at health plans of all kinds and all sizes.
The smallest employers
Friction from hostile state laws and regulations and cost pressure may have been especially discouraging for self-insured micro employers, or self-insured employers with fewer than 10 employees.
Only about 21% of self-insured micro plans surveyed reported having stop-loss insurance in 2023, down from 42% in 2022, according to the EBRI analysis of the government data.
Statistical anomalies could have affected the reported 2022 stop-loss rate for self-insured micro employers, but the 2023 stop-loss rate was also down from a rate of 25% reported in 2021.