It seems like every week someone asks me – “should we self-insure our benefits”, or “How can our organization save money so we can find dollars to meet the new demands of our workforce?” For our purposes in this editorial—the two are related. Self-insured employers do have an advantage in the levers they can pull from a cost containment perspective. However, self-insured employers have to be comfortable with the risk—and every company has a different risk appetite. When you compare the premium elements of a fully insured group versus a self-insured group, the difference is anywhere between 5% and 7%. So, is that compelling enough to make the change? Perhaps, but is it enough? There are a variety of levers a group can consider when they are self-funded including: Rx carve-out, direct contracting, referenced based pricing, plan design freedom, Stop Loss Captives, among others. As a result, when a company evaluates some or all of these options, the total potential dollars can be very compelling. Here are some additional factors worth your consideration: There is no hard and fast absolute in this scenario, it’s really a consideration of risk analysis and tolerance. My thoughts for you in either case: If you are fully-insured: I believe it is worth the discussion and effort to go through the process of seeing how the dollars would pan out to make the change. It will be educational and if the analysis comes back and is attractive, you can always use the information gained as leverage in a fully insured environment. If you are currently self-funded: Take the time to explore the levers I shared above. For example, prescription drug costs represent nearly 30% of your organization’s total healthcare benefits spend, and the Centers for Medicare & Medicaid Services (CMS) estimates pharmacy spend will rise 6.3% annually through 2026. So if you have a $2 million dollar spend, there is a good chance $600K of that is on the pharmacy. What if you could save 15% of those dollars, by carving out Rx? It’s worth your time to do the exercise and learn how you could take your self-funded plan to another level. As always, each employer scenario is unique and I am happy to help. Please give me a call at 856-220-8458 if you would like to discuss your current situation. Welcome to Carlozo’s Corner, a new weekly installment I’m pleased to contribute to the FENG newsletter. I’m Anthony Carlozo, a client executive at Marsh McLennan Agency (MMA), the employee benefits division of Marsh. At Marsh McLennan Agency, I work with organizations of all sizes to help them minimize their risk and maximize the value of their benefits programs. Here I’ll be sharing insights about a current market trend and the strategies I’m seeing employers adopt to adapt to today’s evolving business landscape.