EBRI research finds more small and medium-sized employers converting to self-insured health plans

(Washington, D.C.) – A new research report published today by the Employee Benefit Research Institute found that the availability of self-insured health plans among various sized employers, from 2010 to 2022, have sometimes increased and other times decreased.  However, the data in large part is consistent with the perspective that the Patient Protection and Affordable Care Act of 2010 has caused more small and medium-sized employers to convert to self-insured plans.

The research report, “Trends in Self-Insured Health Plans: Overall Trends Mask Differences by Firm Size,” examined trends in the availability of and enrollment in self-insured health plans among private-sector establishments offering health plans and their covered workers – with the goal to assess whether the ACA might have affected the type of health plan employers offer. The data come from the Medical Expenditure Panel Survey - Insurance Component and are presented in the aggregate and by establishment size.

“Since the passage of the ACA, there has been speculation that an increasing number of small and medium-sized employers would convert health plans from fully insured to self-insured plans, joining the many large employers that already offer self-insured health plans. The rationale has been that several of the key ACA components — creditable coverage, affordability, essential benefits, taxes and fees — would drive up the cost of health coverage and as a result possibly making self-insurance a more attractive option for many employers,” said Paul Fronstin, Ph.D., director, Health Benefits Research, EBRI.

Key findings in the research report include:

• The percentage of private-sector establishments offering a self-insured health plan increased through 2016 but has since ebbed and flowed with no discernible long-term trend.
• Recent trends are more clearly defined when examined by firm size.
• Since 2018, the percentages of small and medium-sized establishments offering at least one self-insured plan both increased. In contrast, the percentage of large establishments offering a self-insured plan has declined. The decline among large establishments occurred in most years since 2013.
• Overall, the percentage of workers in self-insured plans has been bouncing around between 58% and 60% since 2010 but fell to 55% in 2022. This occurred despite the increase in self-insurance among small and medium-sized companies because of the drop in self-insurance among large firms.
• Self-insurance varied substantially by state. Overall, the percentage of private-sector enrollees in self-insured plans varied from 33% in Hawaii to 70% in Ohio. This is likely due to differences in state laws related to regulation of fully insured plans and characteristics of employers in that state.

  “It is clear why self-insurance increased among small and medium-sized employers and their employees. In fact, future research should address the drivers of the decline in self-insurance among large employers,” said Fronstin.

To view a summary of the 9-page Issue Brief, “Trends in Self-Insured Health Plans: Overall Trends Mask Differences by Firm Size,” visit www.ebri.org/publications/research-publications/issue-briefs/content/trends-in-self-insured-health-plans-overall-trends-mask-differences-by-firm-size.