Factors Affecting Self-Funding by Small Employers

Views from the Market

Medical office empty after work.

As policy experts predict that small businesses will increasingly move to self-insure their employees, interviews with small-employer representatives, health insurers, state officials, and others in this report reveal there is still a high-level of uncertainty around just how many businesses will make the move to self-insure and that few small employers currently self-insure.

Key Findings

  • The interviewees in the study states noted that those making the switch will expose themselves to greater risk, as it makes them responsible for covering more of the costs of the claims filed.

  • The stakeholders also said that even with the option to purchase stop-loss policies - which protect employers from unexpectedly high health care costs - small businesses still expose themselves to considerable, and unpredictable, financial uncertainties.

  • The stakeholders interviewed noted the uncertainty stems from the fact that data on the topic are scarce, as states are not closely monitoring this market and that improved data collection efforts could provide clarity.

This report is the latest in a series that documents changes to the implementation of national health reform in Alabama, Colorado, Maryland, Michigan, Minnesota, New Mexico, New York, Oregon, Rhode Island, and Virginia to help states, researchers and policy-makers learn from the ACA implementation process as it unfolds.

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