The Perils of Self-Funding

Self-funding conversions do not necessarily save money. The potential savings that plan sponsors could realize from administrative costs, premium taxes and plan design flexibility can quickly be erased if the coordination of care is weakened or if there is a new network arrangement with inferior provider discounts. Understanding the many variables that come into play during a self-funding conversion is important because they can have a significant impact on the conversion’s success. In its analysis for the Wisconsin Employee Trust Funds, Deloitte concluded that converting the state’s health care program from its current “managed competition” arrangement to a self-funded plan could either save the state up to $20 million per year or cost the state more than $100 million per year. That means the conversion would either trim the state’s health care bill by 2 percent or add another 10 percent or more to its costs. Click here for the complete white paper.  

 

 

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