HCW Benefits Blog

Contributor:
Mike Beck, Health & Welfare Consultant
Hill, Chesson & Woody

Provisions of the Patient Protection and Affordable Care Act (PPACA) are causing shifts in the marketplace on all sides of the issue. Insurance carriers, employers, providers and consumers are each reacting to the government’s regulations that are designed to get everyone insured, control costs and improve health outcomes.

Three specific provisions of reform — medical loss ratio, the modified community rating and guaranteed issue of medical plans — will encourage organizations to consider a move away from fully insured funding to self insurance. Currently, only 13 percent of organizations with less than 100 employees fund their employee health plans in a self funded manner.

Because healthcare reform is reducing competition in the market place, an environment of rising healthcare costs is being fostered. Since reinsurance carriers are not bound by loss ratios or modified community ratings, employers with healthy employee demographics that shift from a fully insured medical plan to a self funded plan potentially will be able to improve their cost position and have more plan design flexibility.

Based on the current PPACA regulations, we believe more small employers will explore self funding as an option. Taking into consideration your organization’s demographics, risk tolerance and goals for self funding is a necessary step that will ultimately determine if this type of funding is a viable option to stem the tide of healthcare reform.

For more information or to discuss your organization's funding type, please call Hill, Chesson & Woody at (919) 403-1986.