Hidden inside this Wall Street Journal editorial there’s a neat explanation of how most “employer-provided” insurance plans are actually paid and administered, at least in the case of large companies:
In an aside in a Federal Register document filed this month, the Administration previewed its forthcoming regulation: “We also intend to propose in future rulemaking to exempt certain self-insured, self-administered plans from the requirement to make reinsurance contributions for the 2015 and 2016 benefit years.”
Allow us to translate. “Self-insured” means that a business pays for the medical expenses of its workers directly and hires an insurer as a third-party administrator to process claims, manage care and the like. Most unions as well as big corporations use this arrangement.
But the kicker here is “self-administered.” That term refers to self-insured plans that don’t contract with the Aetnas and Blue Shields of the world and instead act as their own in-house benefits manager.
Almost no business in the real world still follows this old-fashioned practice as both medicine and medical billing have become more complex. The major exception is a certain type of collectively bargained insurance trust known as Taft-Hartley plans. Such insurance covers about 20 million union members, and four out of five Taft-Hartley trusts are self-administered.
There’s no conceivable rationale—other than politics—for releasing union-only plans from a tax that is defined as universal in the Affordable Care Act statute. Like so many other ObamaCare waivers, this labor dispensation will probably turn out to be illegal.
More than half of all employer-provided healthcare insurance is self-insurance and very, very few companies actually administer the claims themselves. However, unions do. If you add up all of the employers who self-insure plus unions and grandfather their plans, there isn’t a whole lot in employer-supported healthcare insurance left except for what’s been characterized as “substandard plans”, as circular a term as I’ve ever heard.
Right now we’re hearing about cancellations of plans in the individual insurance market but next year the big news will be the cancellation of small group plans.