A New York Times article addresses the self-insurance trend as some companies with relatively young and healthy employees decide to opt out of the health insurance marketplace.
Though it is unclear whether employers are deciding to self-insure as a response to the Affordable Care Act, companies have found they can avoid the laws’ minimum coverage standards and save money by doing so.
“The new health care law created powerful incentives for smaller employers to self-insure,” said Deborah J. Chollet, a senior fellow at Mathematica Policy Research who has been studying the insurance industry for more than 25 years. “This trend could destabilize small-group insurance markets and erode protections provided by the Affordable Care Act.”
However, this change could drive up costs for employees at other companies because commercial insurers and insurance exchanges will be left with disproportionate numbers of older and sicker people who are more expensive to insure. This could drive up premiums for uninsured people seeking coverage in the exchanges and since the federal government subsidizes that coverage, it could face higher costs as well.