At my company — a company in the health plan stop-loss business — we anticipate that 2013 will be a year of both great opportunities and great challenges for the stop-loss market.
These will be driven by the implementation of health care reform under the Patient Protection and Affordable Care Act (PPACA), as well as the continued need to provide solutions that control medical costs while promoting wellness and quality care.
Stop-loss insurance is an arrangement a self-insured employer plan uses to protect itself against catastrophic claims risk.
In 2012, we started to see an increased level of interest in self-funding and stop-loss on the part of small- to medium-sized groups that are currently fully insured. These employers have a heightened awareness that, in order to be able to continue to provide benefits at an affordable cost, they need to consider self-funded alternatives that offer the flexibility and innovative health care management tools necessary to control costs.
We expect this trend toward self-funding to continue to grow as we move into 2013. That move toward self-funding should result in an opportunity for significant growth in the stop-loss market.
This opportunity will require stop-loss carriers to develop new and creative approaches to mitigate the concerns that previously had prevented smaller employers from committing to self-funding. Minimizing gaps in coverage and educating brokers new to self-funding and stop-loss will be crucial. New approaches, such as use of group captive insurers, will help these employers enjoy the financial benefits of self-funding while retaining some of the "safety in numbers" security they enjoyed while fully insured.
