In the increasingly complex and expensive U.S. healthcare landscape, self-insured employers face a dual challenge: ensuring top-quality healthcare for their employees while maintaining a tight grip on costs. And with many businesses operating on razor-thin margins in today’s inflationary economic environment, cost control has never been more critical.
Self-insured employers, who directly fund their employees’ medical expenses while engaging insurance companies to administer benefit programs, are at the forefront of innovative approaches to address this challenge through claims management, combatting fraud and overbilling, and empowering employees beyond selecting the place of care.
Why Are Self-Insured Plans Remain a Popular Choice Amid Rising Costs?
According to a recent Employee Benefit Research Institute (EBRI) report, the percentage of small and medium-sized enterprises offering at least one self-insured plan has continued to rise since 2018. The same EBRI report reveals that, despite a slight dip from more than 80% to just above 70% in larger businesses utilizing a self-insured model, the percentage of workers in self-insured plans across the board has remained in the 55-60% range since 2010, cementing it as a significantly popular option.
This popularity underscores the advantages of self-insurance: greater control and transparency over claims data, the ability to tailor healthcare programs to meet employees’ needs, and superior cost effectiveness.
Even with all their benefits, self-insured plans also present challenges, including a steep learning curve, accounting complexity, and potential financial risk.
The greatest challenge among these: cost control and impact on the bottom line. According to Mercer’s National Survey of Employer-Sponsored Health Plans, health benefit cost per employee rose 3.2% in 2022, and average per-employee cost topped $15,000 for small- and mid-sized employers, with larger companies not too far behind.
In addition to cost increases, Frontiers in Public Health research indicates that, of the population 50 years and older, the number with at least one chronic disease is estimated to increase by 99.5% from about 71 million in 2020 to more than 142 million by 2050. This startling statistic indicates an increasing number of our current younger workers will experience chronic health conditions 30 years down the road.
In turn, these chronic health conditions not only inflate healthcare costs but commonly lead to diminished productivity, decreased employee functionality, and absenteeism. According to Population Health Management, these conditions are responsible for a substantial 30-35% of all annual claims for self-insured employers, necessitating their careful management.
So, with all these factors in play, what can businesses do to ensure their self-insured plans are functioning at peak performance while also serving their workforce’s needs?
How Can Self-Insured Employers Reap Greater ROI on Health Benefits?
To tackle these complex challenges effectively, self-insured employers benefit from a multifaceted approach:
- Seeking pre-deductible coverage for chronic conditions: Since July 2019, the IRS has allowed employers the flexibility to cover specific treatments for chronic conditions outside high-deductible health plan deductibles, making care more accessible without raising premiums.
- Leveraging data analysis and predictive analytics: Leveraging data analytics, self-insured employers can identify employees at risk of developing chronic diseases and proactively engage them in preventative interventions, such as ergonomic assessments or exercise programs.
- Incorporating claims management tech: Claims management platforms use advanced analytics and fraud detection algorithms to automatically flag potentially inaccurate or fraudulent claims for further investigation, saving employers and employees significant time and money.
- Optimizing drug formularies: A Johns Hopkins Bloomberg School of Public Health study found that, when self-insured employers swapped prescription drugs with less expensive options, they saved a whopping 9-15% on annual prescription drug spending.
- Tapping into telemedicine: Virtual-first health plans often improve healthcare access and convenience for employees while potentially reducing costs for employers.
- Prioritizing mental health: It’s crucial that employers acknowledge the growing importance of mental health, and offering comprehensive coverage for this area will better support overall employee well-being.
How Can Employees Contribute to Employer Healthcare Cost Control?
When it comes to protecting the bottom line, businesses are not the only players who can make a difference—employees are part of the big picture, too. Across employee healthcare privacy and advocacy education, a few areas are particularly vital:
- Applying the Health Insurance Portability and Accountability Act of 1996 (HIPAA): HIPAA regulations are designed to safeguard the privacy and security of medical information and protect a wide range of medical data, from medical records to prescriptions. HIPAA also extends important rights to patients, including the ability to request copies of health records and control of who can access health information.
- Establishing reporting and monitoring procedures: Businesses should empower employees with resources and tools on how to file a complaint with the Department of Health and Human Services (HHS) or what to do if they’ve fallen victim to a fraud scheme or believe they’ve been overbilled for a procedure. Additionally, training on what to look out for on their medical bills and EOBs can help employees play a crucial role in ensuring claims accuracy and detecting fraud.
- Protecting sensitive medical information: Self-insured employers can encourage employees to take additional steps to physically and digitally protect their medical information, such as securely disposing of medical documents and using strong, unique passwords.
Ultimately, when self-insured employers partner with employees to proactively manage claims and combat fraud and overbilling, these businesses can strike the necessarily delicate balance between facilitating cost control and offering their workers top-notch healthcare.
These multifaceted strategies are essential for not only safeguarding the financial well-being of organizations but also promoting the health and well-being of their most valuable asset: their employees.
Scott Speranza is the CEO of HealthLock, a digital solution that monitors members’ healthcare claims and keeps them apprised of possible red flags putting their medical identity and finances at risk. He is passionate about combining his deep knowledge of health insurance with technical know-how to make healthcare simpler and more effortless for all.