Introduction

The landscape of self-insurance is undergoing subtle yet noteworthy changes. According to a recent issue brief by the Employee Benefit Research Institute (EBRI), large employers are showing a gradual decline in offering self-insurance options, while small- and medium-sized employers are increasingly embracing them. This shift in preference raises questions about the driving forces behind it and its long-term implications.

The Trend Among Large Employers

The issue brief from EBRI highlights that the percentage of large establishments (500 or more employees) offering at least one self-insured plan has been steadily decreasing since the Affordable Care Act’s (ACA) passage. In 2022, this figure dropped to 72%, the lowest since 2010. According to Paul Fronstin, Ph.D., director of health benefits research at EBRI, while the decline is not drastic, “something’s going on there, and we’ve got to figure out what it is.”

Small and Medium Employers Take the Lead

Conversely, smaller employers are showing more interest in self-insurance. Small employers (fewer than 100 employees) offering self-insurance reached 18% in 2022, up from 13.2% in 2018. Medium-sized employers (100-499 employees) also experienced growth, with the percentage offering self-insurance reaching a peak of 37% in 2022.

Why the Shift?

The ACA encouraged smaller companies to adopt self-insurance, and the rise in numbers among small and medium companies may reflect this policy nudge. However, state-specific factors also influence these statistics. For instance, the issue brief notes that the number of private-sector workers in self-insured plans varies significantly across states, likely due to differing state laws and employer characteristics.

What’s Next?

Both federal agencies and researchers like Fronstin are keen to explore this topic further, as many questions remain unanswered. The U.S. Department of Labor has even proposed a rule change to gather more information about self-insured arrangements among small- and medium-sized companies.

Conclusion

The shifting patterns in self-insurance across companies of varying sizes reflect broader changes in healthcare policies and economic considerations. As research and data continue to illuminate the specifics of this trend, one thing is clear: the landscape of self-insurance is far from static, and its future could have far-reaching implications for both employers and employees.

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