SELF-INSURING EMPLOYEE HEALTH BENEFITS

Self-insurance is a popular way to fund employee health benefits, but it presents a potential barrier to state health insurance reform initi atives because self-insured health plans are able to avoid state regul ation. Thus it is important to understand why employers self-insure. T his study tests an explanatory model of self-insurance, using data fro m the 1989 Survey of Health Insurance Plans. Models predicting self-in surance are estimated for private employers and for all health plan sp onsors, including public employers, unions, and trade associations. Th e author found a threshold for self-insuring among private employers a t about 100 employees and another at about 200 workers when all health plan sponsors were considered. Plans with union members are more like ly to be self-insured. Self-insurance is more likely in the presence o f alcohol treatment mandates but less likely with mental health mandat es.