Self-Insured Employers, Explained

In this Cancer Care Business Breakthroughs video, Deirdre Saulet, PhD, Carrum Health, provides an overview of self-insured employers, including a definition of the term, statistics on why more employers are going the self-insured route, and why the cost of cancer care is such a big concern.

This video is the second for the Cancer Care Business Breakthroughs topic area, "The Sleeping Giant: Cost of Cancer Rousing Self-Insured Employers." You can see other videos in this topic area here. Future videos will include discussions on innovative solutions in the market and a breakdown of what this all means for cancer care providers. If you have topics you'd like Cancer Care Business Breakthroughs to cover, let us know by using the Submit Feedback option below. 

Transcript:

Deirdre Saulet: Hello, and welcome to Cancer Care Business Breakthroughs, a video series where we'll have conversations around hot topics and innovations in cancer business and strategy, and how those are impacting providers and patient care.

By way of quick introduction, I'm Deirdre Saulet. I have the honor of being your host today on behalf of the Cancer Care Business Exchange. I've spent the past 10 plus years researching and working in the oncology space, formerly leading best practice and market research at Advisory Board, and currently serving as Market VP of Oncology at Carrum Health.

Now, for our time today, we are going to take a quick look at self-insured employers: What it even means for employers to be self-insured, and why cancer is increasingly on their radar. 

Let's start by laying out why we should even care about self-insured employers in the context of employee health benefits to begin with. This will be a quick refresher for many of you, but I think it's really important to underscore that about half of Americans have insurance through their employer. Of those, two-thirds are in self-funded plans, and we've seen that percentage steadily creep up over the past few years. And that means that self-insured employers foot a huge portion of overall US health care spending.

Now, when an organization self-insures a group health plan for its employees, it involves creating a fund that pays employees' health claims as they occur. That's mainly how self-insured health plans differ from fully insured health plans.

In a fully insured, or an indemnity, health plan, employers pay a premium each month to a health insurance company, and that health insurance company assumes a financial risk of the employer's health care costs as they're generated by its employees.

Now, while the self-insured employer takes on financial risk for their employees' health care costs, we've seen more employers move into self-insured plans because of the benefits. Namely, it gives them more freedom in their plan design and structure.

This allows them to curate benefits offerings that will meet their priorities and meet the needs of their employee population, with the ultimate goal of driving improved employee health and also controlling costs.

And when it comes to their priorities, cancer traditionally hasn't been at the top of their list. Not because they don't care about cancer, but because it is so complex, it is so personal, and let's be honest, it can be really confusing. But we see that changing for a few reasons.

First off, and the most obvious, is the costs. The data on this slide is from a survey that the Business Group on Health released in August of 2022. In it, they asked large employers what their top 3 spend areas are by health condition. As you can see, 83% of employers said that cancer was one of their top spend conditions in 2022. Compare that to 78% of employers saying musculoskeletal was a top spend area, and 30% saying cardiovascular was.

In fact, this was the first time ever that cancer overtook musculoskeletal on this list in this annual survey, and it's caught a lot of employers’ attention. In a series of interviews I did this summer, every single employer I spoke with named cancer as their top 1 or top 2 cost drivers.

Adding to that, employers are anxiously awaiting how the pandemic and the drop off in preventive care and screening is going to impact those costs moving forward. Fifty-seven percent of employers in that same Business Group on Health survey have seen, or are expecting to see, a higher prevalence of late-stage cancers in their employee population.

Additionally, there's been a lot more awareness about the variation we see in patient outcomes, quality of care, adherence to evidence-based care, and just overall patient experience. Included in that is the patient's financial experience.

Now, in the cancer world, we've been talking about financial toxicity for years. Seventy-three percent of cancer patients are concerned about their ability to afford their care. And more patients are afraid of the cost of a cancer diagnosis than they are of dying from the disease.

And sadly, that's for good reason. Studies have shown that cancer patients are far more likely to declare bankruptcy than nondiagnosed Americans. In addition to the psychosocial strain that this puts on patients, we know it adversely impacts their quality of life and outcomes, including even their risk of mortality.

From my conversations, a lot of employers are really starting to zero in on financial toxicity. They're seeing the very real and the very lasting impact that the cost of cancer has on their employees’ overall well-being. So, many agree: they need to find ways to improve the cancer care experience for their employees and their dependents.

From that Business Group on Health survey earlier this year, a few specific strategies stood out. First is related to precision medicine and our growing knowledge of how to detect and treat cancers better. So, still a fairly small percentage, but 11% plan to cover multi-cancer early detection tests like GRAIL in 2023, and about one-third are looking to implement standard coverage rules for genomic testing.

And I think this is an area where employers realize they have a lot to learn, they have a lot to understand still. But I think they're going to take a very active role in driving the delivery of personalized cancer care. And importantly, half are interested in implementing the Centers of Excellence.

Centers of Excellence have been an area focus for employers for years, starting with COEs for specific conditions like musculoskeletal and bariatrics. But interest in COEs for oncology is really growing quickly.

In fact, across all the conditions employers were asked about, cancer is by far the one where there is the most interest in the next 2 to 3 years, with 76% of employers saying that they plan to have a COE strategy in place for cancer care by 2024 to 2025.

Zooming back out, here's a high-level view of the landscape. Not all, but many, of the solutions I've included on this slide aim to help self-insured employers across different parts of the cancer continuum. For instance, on the front end you've got GRAIL with their multi-cancer early detection test that has the end goal of finding more cancers earlier; certainly top of mind in the aftermath of the pandemic.

Moving along, once someone is diagnosed with cancer, a number of second-opinion and expert-review services from a variety of players, including a lot of familiar names that includes health plans, organizations like Grand Rounds and Cancer Expert Now, and providers like Memorial Sloan Kettering and AccessHope.

In terms of treatment Centers of Excellence, many people immediately think of the health plans' Centers of Excellence. Full disclosure: This is where my company, Carrum, mainly operates. We partner with cancer providers to create bundles that are the foundation of our treatment Centers of Excellence.

And along this continuum are advocacy and navigation solutions, companies like Jasper, Thyme Care, as well as many health plans who have cancer-specific navigation programs. Many of these may help cancer patients transition out of active treatment. But, as you can tell from this slide, not a whole lot of targeted survivorship and end-of-life solutions. And when we think about meaningful ways to drive improved quality of care and to decrease costs, those two feel like really big opportunities in this space.

Now, good news, if you're interested in learning more about some of these organizations and what they're doing in the self-insured employer space, we're going to be talking to many of them across this series. And importantly, we're going to tease out during the series what all of this means for cancer providers, and how they need to be thinking about and accounting for self-insured employers in their strategy moving forward.

Thank you all for watching, and we look forward to building on this information and continuing the conversation on self-insured employers in upcoming Cancer Care Business Breakthrough videos.

References

Congressional Research Service. U.S. health care coverage and spending. Updated April 1, 2022. Accessed January 1, 2023. https://sgp.fas.org/crs/misc/IF10830.pdf

Collective Health. Self-funded or fully insured health plans: what’s best for your company? Published May 4, 2022. Access January 1, 2023. https://collectivehealth.com/blog/insights/self-funded-or-fully-insured/

Business Group on Health. Cancer now top driver of employer health care costs, says Business Group’s 2023 health care strategy and plan design survey. Published August 23, 2022. Accessed January 1, 2023. https://www.businessgrouphealth.org/en/who%20we%20are/newsroom/press%20releases/2023%20lehcspds

Ramsey SD, Blough DK, Kirchhoff AC, et al. Washington state cancer patients found to be at greater risk for bankruptcy than people without a cancer diagnosis. Health Aff (Millwood). 2013;32(6);1143-1152. doi:10.1377/hlthaff.2012.1263

Cancer Action Network. Survivor views: cancer & medical debt. American Cancer Society Cancer Action Network. Published March 17, 2022. Accessed January 1, 2023. https://www.fightcancer.org/policy-resources/survivor-views-cancer-medical-debt