More employers are exploring the option of a self-funded insurance model to take control of their healthcare costs. After all, employers often are shouldering a portion of healthcare premiums in many cases, and that adds up to significant cost.
Here are a few key considerations for employers exploring the self-funded model.
Increasing vertical consolidation in the fully funded market
Again and again, major corporations are merging in the fully funded market. For example, in fall of 2018 the Justice Department approved the $69 billion merger between CVS Health and Aetna.
That means less choice for employers in the fully funded market. And it’s that lack of choice that drives many to the self-funded insurance model so that they have more control and greater transparency in all aspects of their healthcare spending.
Analysis of risk and necessary assets to assume that risk
The self-funded model isn’t for every company, of course. The company needs to assess the overall health of its workforce, its financial stability, and the overall risk. And then, of course, they must have the right assets to assume the risk for employee healthcare costs.
Transparency in healthcare and pharmacy costs
In general, the self-funded model is more transparent on costs than the fully-funded model. But even within the self-funded model, there are companies that aren’t upfront with their costs and therefore don’t embrace true transparency.
This can be especially true with pharmacy benefits, so be sure you or your broker explore all the PBM options and choose one where you can truly understand the costs associated with your prescription benefit. Prescription costs can be a significant portion of your healthcare costs over time, so it’s important to know what you’re spending and why.
In many cases, larger employers are more likely to embrace the self-funded model, but even small businesses can benefit if they fully explore their risk and their options up front before making a final decision.
At MaxCare, we value true transparency and work with our clients to ensure they understand every aspect of their pharmacy benefits plan. If you have any questions, please contact us to discuss your options.