It’s been said that the only things certain in life are death and taxes. I’m pretty sure that continued uncertainty for healthcare reform could be a legitimate addition to that list—at least through 2018.

Self-funded employers are uniquely empowered with the ability to design plans that have an increased focus on controlling risk within their underlying benefit plan, to generate greater loss-cost savings.

In March, the US House of Representatives, by an overwhelming majority, passed the Self-Insurance Protection Act. Although the act does not materially alter the regulatory status quo, it does provide a path to legislation that will eventually affirm and preserve an employer’s ability to self-fund employee benefit healthcare insurance.

One of the basic principles of any alternative risk programme is being able to assume predictable known segments of risk while transferring more unpredictable unknown risks to insurers, the premise being that a known or ‘expected’ risk can be budgeted and held more efficiently as retained risk by the employer rather than being transferred, redundantly, to an insurer at a higher cost-fixed premium.

The increasing popularity of employer self-funding of healthcare benefits has expanded the scope of professionals involved in this specialised industry segment.

The primary motivation for an insured to participate in a captive or other alternative risk programme is to control the ultimate cost of risk by reducing their reliance on traditional insurance coverage.

One of the first things taught in Economics 101 is the diminishing effects that inflationary trend has on the value of a dollar. Nowhere can this be better illustrated than in the rising cost of healthcare in the US.

Interest in self-funding and group captives will grow significantly as medical costs continue to rise and the uncertainties related to ACA healthcare reform threaten the cost and amount of control that employers are able to maintain within more conventional insurance structures. Hopefully, the legislative marksmanship relative to healthcare reform will also sharpen to the point of actually hitting the correct targets...