This is not a political blog; we don’t do the legal equivalent of talk show satire. Though we’re forecasting future events, subject to all the errors that inhere, our title is entirely serious.
The recent ruckus over cancelled policies in the individual market, and the coming storm over cancellations in the small group market, will cause even employers with self-insured group health plans to wonder if their time is coming. It may be.
Not because the ACA regulates excess liability policies. It doesn’t. And not because the ACA coverage and cost-sharing mandates for self-insured plans are the same as for fully insured plans. Generally speaking, self-insured plans are less burdened. The risk we see for self-insured plans is of another sort entirely.
The network wars have begun. Insurers and providers are at odds over provider reimbursements. Insurers, compelled now to cover even the oldest and sickest under community rating rules applicable to individual and small group policies, and bound by mandatory medical loss ratio rules, need to raise revenues in every way possible. They also need to hold as much of their market shares as they can, so they fret about employers fleeing to the relative safety of self-insurance.
Many such employers, self-insurer rookies, retain small, low-cost, third party administrators that, typically, pay provider network owners to rent access to those networks and their associated provider discounts. Many provider networks are owned or controlled by the state’s dominant health insurers. You see where this may be going.
The day may come, perhaps soon, when insurers, by raising network rental rates, price some third party administrators out of business. Few employers can self-administer their self-insured plans. Most who lose their small TPA will need to terminate their self-insured plan and buy insurance, or find a new TPA that will pay and pass-through the higher cost of insurer network rental.
If you have self-insurance that you like, now would be a good time to start planning how you will keep it.