Insurers cite company self-funding rise

U.S. employers are expected to increasingly shift toward self-funding their group health insurance plans as a result of the health reform law, according to a survey of health insurance executives released Monday by Munich Health North America, a subsidiary of Munich Re.

Among those surveyed, 82 percent have experienced a growing level of interest among employers in self-funding their group health insurance plans over the past 12 months, with nearly one-third, or 32 percent, reporting that interest has increased "significantly," Munich Health noted in a press release.

In March, Munich Health surveyed 326 executives representing health plans, health maintenance organizations and disease management firms, as well as health insurance brokers and agents, regarding the extent to which the Patient Protection and Affordable Care Act will influence decision-making related to employee health benefits.

The trend away from providing group health insurance towards self-funding is due to employers' wanting to maintain a level of flexibility and control in the design and financing of their employees' health benefits, said Richard Phillips, president of Munich Health North America's reinsurance division in the press release. 

"A properly designed self-funded health plan can allow a company to directly reap the benefits of their cost containment and wellness activities as opposed to having to pay a monthly premium based on an arbitrary set of rating restrictions," he said in the announcement.

"As companies struggle with the growing cost of providing quality benefits, we expect self-funding to continue to grow in popularity," he added.

Health insurance organizations anticipate growth in their self-funded or administrative services only (ASO) portfolios as a result of this trend towards self-funding. Of those surveyed, nearly seven in 10, or 69 percent, plan on growing their self-funding or ASO portfolios over the next year, according to the release.