Yu Lei, U.S. Health Insurers' “Main Job” vs. “Side Job”: Data Report 2011–2023 (2026)
Summary
Data report by Yu Lei of the University of Hartford, U.S. Health Insurers' Main Job vs. Side Job: Data Report 2011–2023, published 10 February 2026 in Front. Public Health 14:1651982, DOI 10.3389/fpubh.2026.1651982, received 23 June 2025 and accepted 19 January 2026. The introduction cites a settlement approved by a U.S. district judge on September 4, 2025 involving Aetna and its subcontractor Optum over self-insured employer plans, and lawsuits against other large insurers over administrative services to such plans. The report distinguishes an insurer's main job of offering fully-insured plans, for which it bears underwriting risk, from the side job of administering self-insured plans as a third-party administrator without risk transfer. It examines enrollment and expense structure across the two segments.
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“Yu Lei, U.S. Health Insurers' ‘Main Job’ vs. ‘Side Job’: Data Report 2011–2023 (2026).”
Original at public-pages-files-2025.frontiersin.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/yu-lei-u-s-health-insurers-main-job-vs-side-job-data-report-2011-2023-c31caab887/
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TYPE Data Report
PUBLISHED 10 February 2026
DOI 10.3389/fpubh.2026.1651982
U.S. Health Insurers’ “Main Job”
OPEN ACCESS vs. “Side Job”: Data Report
2011–2023
EDITED BY
Xin Long Xu,
Hunan Normal University, China
REVIEWED BY
Víctor Hugo Fernández-Bedoya, Yu Lei*
Universidad Nacional Mayor de San
Marcos, Peru Barney School of Business, University of Hartford, West Hartford, CT, United States
Xiang Gao,
Shanghai Business School, China
Naresh Kumar, KEYWORDS
Maharaja Surajmal Institute of
Technology, India enrollment, expense structure, fully-insured plans, health insurance, self-insured plans,
third-party administrators
*CORRESPONDENCE
Yu Lei
lei@hartford.edu
RECEIVED 23 June 2025
Introduction
REVISED 19 December 2025
ACCEPTED 19 January 2026
A U.S. district judge on September 4, 2025 approved a settlement requiring Aetna
PUBLISHED 10 February 2026
(part of CVS) to pay 4.6 million and its subcontractor Optum (part of UnitedHealth
CITATION
Lei Y (2026) U.S. Health Insurers’ “Main Job” vs.
Group) to pay $200,000 to participants in the self-insured employer-sponsored health plans
“Side Job”: Data Report 2011–2023. that it administered (1). The two companies were accused of using “dummy codes” to
Front. Public Health 14:1651982. bundle administrative fees with provider charges, thus increasing the total claims cost for
doi: 10.3389/fpubh.2026.1651982
employers and out-of-pocket expenses for their employees.
COPYRIGHT
Several other top insurers were also accused of self-dealing in providing administrative
© 2026 Lei. This is an open-access article
distributed under the terms of the Creative services to self-insured employer-sponsored health plans. Cigna was sued for intentionally
Commons Attribution License (CC BY). The underpaying out-of-network providers1 and then charging “saving fees” to the plaintiff (2).
use, distribution or reproduction in other In separate cases, United Healthcare (3), Elevance (formerly known as Anthem)2 , and Blue
forums is permitted, provided the original
author(s) and the copyright owner(s) are Cross Blue Shield of Massachusetts (4) were all sued for making overpayments to providers,
credited and that the original publication in resulting in losses to the plaintiffs. United Healthcare (5) was also accused in a separate
this journal is cited, in accordance with
lawsuit of cross-plan offsetting, i.e., using funds from their self-insured plans to recoup
accepted academic practice. No use,
distribution or reproduction is permitted losses incurred in their fully-insured plans.
which does not comply with these terms. The growing number of cases against health insurers drew attention to the potentially
misaligned incentives between insurers that serve as third-party administrators (TPA) of
self-insured plans and their employer clients. The U.S. Internal Revenue Service requires
the presence of risk shifting and risk distribution to be present if a transaction is to be
considered insurance for federal income tax purpose3 . An insurance company’s “main job”
is thus to offer fully-insured plans for which they bear the underwriting risk of claims cost.
Administering self-insured plans is a “side job” that does not involve risk transfer as it is
the employer client’s responsibility to cover claims.
The different risk natures of the two insurance segments may result in differing
incentives. In the risk-bearing fully insured business segment, insurers have strong
incentives to manage the underwriting risk as they are legally obligated to pay claims
even when they have insufficient premium income. In the risk-free4 self-insured business
1 https://www.millerchevalier.com/sites/default/files/resources/General_Alerts/Cigna
%20Complaint.pdf
2 https://www.dwt.com/-/media/files/blogs/employment-advisor/2023/08/85w.pdf?rev=
3bc489ecd81f49468585fa77fcc778e6&hash=E009DD69CC32251B26FEA5717C6C81B6
3 https://www.irs.gov/pub/lanoa/pmta01392_7369.pdf
4 In the sense of free of underwriting risk.
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Lei 10.3389/fpubh.2026.1651982
segment, insurers are paid a flat per-member-per-month fee to Two studies compared fully-insured and self-insured plans.
provide contracted administrative services, including using their One report (14) found that insurers spent the most quality
employer clients’ assets to pay claims5 . Insurers are thus less likely improvement expenses per member in their government plans
to be as invested in managing the underwriting risk in self-insured and the least on their self-insured members, with commercial
plans, which would go against their employer clients’ interest in insurance spending in between these two extremes. Another study
holding down healthcare spending. The overpayment and cross- (15) had similar findings that self-insured plans incurred lower
plan offsetting lawsuits mentioned above provided some anecdotal per-member quality improvement expenses than fully-insured
evidence of the misalignment problem. One report argues that commercial group plans during the study period 2010–2018. The
TPA-insurers may also “skimp on costs” (6) or even hide expenses same study also reported that fully-insured plans increased quality
in medical charges as in the Aetna case. improvement expenses to reach the MLR threshold but it was
Self-insured plans and fully-insured plans are also regulated unclear whether the increase was new investment or reallocation
differently, which may be another factor contributing to the of funds from self-insured plans to fully-insured plans.
differences in their claims and expense experiences. Fully-insured Given the differing risk natures and applicable regulations
plans are subjected to state insurance regulation and all of the in fully-insured plans and self-insured plans, it is important to
regulations under the Patient Protection and Affordable Care understand the workings of the self-insured segment in terms
Act (ACA). Self-insured plans are exempt from state insurance of its claims and expense experiences and whether insurers use
regulation and are governed at the federal level by the Employee self-insured plans to cross-subsidize their fully-insured segment
Retirement Income Security Act (ERISA) (7) and some ACA (possibly at the expense of their employer clients and plan
regulations (8)6 . beneficiaries). To address these questions, we’d need complete
The ACA became law on March 23, 2010 and imposed a claims and expense data from self-insured plans. Insurers though
plethora of new regulations aimed to improve access to quality care are not required to report claims data for self-insured plans.
at reasonable cost. One of such regulations is the medical loss ratio Since we only have enrollment and expense data for self-insured
(MLR) rule which took effect on January 1, 2011 and is enforced by plans, we focus our research on examining two things: 1) whether
the Centers for Medicare and Medicaid Services (CMS). The MLR there is any correlation in size between the fully-insured segment
rule mandates that carriers spend at least 80% of their premium and the self-insured segment. We posit that if insurers intend to
dollars on medical claims cost and quality improvement expenses cross-subsidize between the two segments, there may be a positive
in the individual and small group market (85% in the large group relationship between the segment sizes, given the fact that major
market)7 . If an insurer’s MLR falls below the threshold, they must TPAs are mostly large health insurers. 2) whether there is any
offer rebates to their policyholders. difference in expense structure between the two segments. We
The MLR requirements only apply to fully-insured plans, not posit that self-insured plans may spend less on expenses given the
self-insured plans. Several studies examined fully-insured plans’ anecdotal evidence that some may bundle certain expenses with
strategies to become MLR compliant. Some found that insurers claims cost and/or skimp on costs to increase net profit.
overstated claims to achieve the MLR threshold. A study (9) found The rest of the article is organized as follows: we give a brief
that higher medical claims were the primary reason that insurers overview of the prevalence of self-insured plans in the next section,
in the individual and small group markets whose MLRs were far followed by presentation of the data source and analysis results. We
below the 80% threshold reported larger MLR increases from 2010 conclude the article with discussions and policy implications.
to 2011. An analysis of insurer data from 2005 to 2013 (10) reported
that individual market insurers increased claims cost by seven
percent on average to meet the MLR requirements. Another study
(11) estimated that approximately 14 percent of insurers engaged in
Increasing Popularity of Self-insured
strategic over-estimates to avoid paying rebates. The rebate amount Plans
avoided due to overstated claims was approximately $190 million
to $325 million for 2011–2013 (12). A majority of people in the U.S. who had health insurance
Besides overstating claims, insurers were also found to meet the obtained coverage from their or their family members’ employers
MLR rule by way of managing expenses. One study (13) reported and the latest data available indicated that 53.8% of the insured
that fully-insured plans in the individual market reduced their population were covered by employment-based insurance (also
median administrative cost ratio and operating margin between known as group insurance) in 2024 (16). While many employers
2010 and 2011 by more than two percentage points each to were already offering health insurance to their employees
arrive at a seven-percentage-point increase in their median medical voluntarily before the ACA became law, the ACA’s employer
loss ratio. mandate requires all employers with 50 or more full-time
employees to offer group insurance beginning in 2015 or pay a per-
worker penalty (17). This mandate further makes group insurance
5 https://mightywellhealth.com/wp-content/uploads/2022/12/Planstin- a more important issue for employers.
ASA.pdf There are two financing options for employers. They may
6 https://www.cms.gov/cciio/resources/files/downloads/opt_out_memo. purchase fully-insured plans from commercial insurers, paying a
pdf fixed per-worker premium to transfer the risk to their insurers.
7 https://www.cms.gov/marketplace/resources/data/medical-loss-ratio- They could also self-insure their workers’ medical expenses, paying
data-systems-resources claims from their general assets or a trust fund. As employers are
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Lei 10.3389/fpubh.2026.1651982
TABLE 1 Percent of covered workers in self-insured group insurance.
and claims bounced back to pre-pandemic levels), but still stayed at
63% in 2024 across all firm sizes.
Year All Small firms Large firms
firms (3–199 workers) (200 + workers) The increasing popularity of self-insured plans was followed
by a strong demand for TPAs. While there are many non-insurer
2009 57% 15% 65%
third-party administrators, many employers still outsource their
2010 59% 16% 63% self-insured health plan management to health insurers. One study
2011 60% 13% 64% finds that self-insured plans made up a large portion of major health
insurers’ business mix in 2020, with Cigna having 76% of covered
2012 60% 15% 62%
lives in self-insured plans, Aetna 59%, and United Healthcare
2013 61% 16% 61%
42% (6).
2014 61% 15% 62% Mark Farrah Associates (MFA), a leading data aggregator and
2015 63% 17% 63%
publisher, reported that self-insured enrollment has been increasing
steadily over time, reaching 133.3 million in 2025 (20). It also found
2016 61% 13% 61%
that in 2021 Elevance Health; Health Care Service Corporation
2017 60% 15% 79% (HCSC); Highmark, and Blue Cross Blue Shield of Michigan (BCBS
2018 61% 13% 81% of MI) all collected over $1 billion in income from fees of self-
insured plans.
2019 61% 17% 80%
While the prevalence of self-insured plans has been reported,
2020 67% 23% 84% there is limited research about the self-insured segment, especially
2021 64% 21% 82% in its relation to its fully-insured counterpart. This study fills
in the gap in literature and offers new insights into the self-
2022 65% 20% 82%
insured segment.
2023 65% 18% 83%
2024 63% 20% 79%
Data
Data Source: the Kaiser Family Foundation’s Employer Health Benefits Survey.
We use the CMS Medical Loss Ratio Data and System
not insurance experts, they often outsource the management of Resources public use files (“MLR data”) from 2011 to 20238
health plans to TPAs, which could be insurers or non-insurers. to examine health insurers’ “main job” (underwriting insurance
Both financing options have advantages and disadvantages. policies) and “side job” (administering self-insured plans).
With fully-insured plans, employers do not bear the underwriting The MLR data are based on the Supplemental Health Care
risk but lack flexibility in tailoring plans to meet their employees’ Exhibit (SHCE), part of health insurers’ statutory filings. The
unique health care needs. Additionally, they have no control over SHCE was developed by the National Association of Insurance
premium levels. A Wall St. Journal article (18) cited the benefits Commissioners (NAIC) to monitor health insurers’ compliance
consulting firms Mercer and Willis Towers Watson saying that with the MLR rule. The NAIC data containing the SHCE is
costs for employer coverage are expected to surge around 6.5% proprietary. The MLR data is publicly available and looks slightly
for 2024. different from the SHCE. For instance, fees from self-insured plans
Self-insured plans allow employers to design their health plans are reported in line 6 of part 1 in the 2023 MLR data forms9 but
and invest their premium funds. However, they bear underwriting in line 12 of part 1 in the 2023 SHCE data (21). Another example
risk if their workers incur unexpected high claims. The total cost of is that the SCHE directly reports underwriting gain (in line 12) but
self-insured plans (including claims cost, administrative expenses, the MLR form does not.
and third-party administrator fees) could be higher than premiums The MLR data tracks components used to calculate the MLR
for fully-insured plans. and rebates (if any) and contain several parts (see footnote 9). For
While employers may favor fully insured plans to transfer the fully-insured plans, insurers are required to report information on
underwriting risk, more than fifty percent of U.S. employers self- premiums, claims, and expenses by lines of insurance.
insure their health plans to save money, maintain control over Self-insured plans are termed uninsured plans in insurers’
benefit design, or to lessen the burden of regulations. statutory filings. The CMS defines “uninsured plans” as those
Table 1, which reports our tabulation of the Kaiser Family “for which a reporting entity, as an administrator, performs
Foundation’s annual Employer Health Benefits Survey results (19), administrative services such as claims processing for an employer
shows that the enactment of the ACA in 2010 has been followed that is at risk, and accordingly, the administrator has not issued
by a steady increase in the percent of covered workers (with group an insurance policy.” 10 Since insurers bear no underwriting risk
health insurance) in self-insured plans. The 2020 pandemic further for administering self-insured plans, premiums received and claims
fueled the growth of self-insured plans with people canceling or
postponing care. Large firms with 200 or more workers were much 8 https://www.cms.gov/marketplace/resources/data/medical-loss-ratio-
more likely to self-insure their health plans than small firms. In data-systems-resources
2020, 84% of large firms self-insured their health plans, as opposed 9 https://www.cms.gov/files/document/2023-mlr-reporting-form.xlsx
to 23% for small firms. The percent of covered workers in self- 10 https://www.cms.gov/cciio/resources/files/downloads/mlr-annual-
insured plans decreased slightly post-pandemic (when utilization form-instructions051612.pdf
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TABLE 2 Correlation between fully insured plans (all lines combined) and
paid on behalf of such plans are not reported as premiums or claims
self-insured plans.
for the insurers. They, however, are required to report to CMS fees
earned and expenses incurred from managing self-insured plans, as Year Fully-insured Fully-insured
well as other pertinent information such as the number of lives and enrollment vs. enrollment vs.
member months covered in self-insured plans. Self-insured enrollment Self-insured fees
The 2011–2023 MLR data included 893 distinct insurers. Pearson Spearman Pearson Spearman
We conduct our analysis at the firm-year level. We first 2011 0.1041 0.2486∗∗ 0.2205∗ 0.3248∗∗∗
examine whether there is any correlation between the sizes of
2012 0.5782∗∗∗ 0.2472∗∗∗ 0.6233∗∗∗ 0.2800∗∗∗
fully-insured and self-insured plans and then analyze the two
segments’ expense structures. Fully-insured plans include all lines 2013 0.4001∗∗∗ 0.3032∗∗∗ 0.4577∗∗∗ 0.3999∗∗∗
of insurance reported, including comprehensive individual market, 2014 0.4608∗∗∗ 0.2520∗∗∗ 0.5002∗∗∗ 0.2869∗∗∗
comprehensive small group market, commercial large group, mini-
2015 0.5694∗∗∗ 0.2944∗∗∗ 0.6514∗∗∗ 0.3554∗∗∗
med individual market, mini-med small group market, mini-med
∗∗∗ ∗∗∗ ∗∗∗
large group market, expatriate small group market, expatriate 2016 0.5702 0.4469 0.6534 0.5035∗∗∗
large group market, student health plans, government program 2017 0.4421∗∗∗ 0.2967∗∗ 0.6557∗∗∗ 0.2939∗∗∗
plans, and other health insurance. For definitions of each line of
2018 0.4555∗∗∗ 0.3412∗∗ 0.6641∗∗∗ 0.3596∗∗∗
insurance, see CMS filing instructions11 .
2019 0.5460∗∗∗ 0.2278∗∗ 0.5755∗∗∗ 0.3414∗∗∗
While the mandatory MLR reports were authoritative, there
are a few limitations. We note that there were missing values in 2020 0.5360∗∗∗ 0.4301∗∗∗ 0.5766∗∗∗ 0.5112∗∗∗
the data, but it is comparable to the proprietary NAIC data. For 2021 0.5341∗∗∗ 0.2056∗ 0.5792∗∗∗ 0.3294∗∗∗
instance, our tally of the data indicates that self-insured enrollment
2022 0.5460∗∗∗ 0.2339∗∗ 0.5966∗∗∗ 0.3734∗∗∗
increased from 92.3 million in 2011 to 118 million in 2023. A
study using the proprietary NAIC data (22) reported an enrollment 2023 0.5199∗∗∗ 0.1541 0.5672∗∗∗ 0.2912∗∗∗
increase in the self-insured segment from 96 million in 2010 to 118 Data Source: Author’s analysis of the CMS MLR data.
∗∗∗ , ∗∗ , ∗ : significant at the 1%, 5%, and 10% level.
million in 2022 (the MLR data showed an enrollment of 120 million
that year).
Another limitation was that the MLR reports only began in
2011, when the MLR took effect. Insurers however have been member count will lead to higher total fees if the per-member fee
administering uninsured plans long before that. Caution must be remains constant.
exercised when attempting to generalize the results reported below. The trend we observe suggests that insurers likely use fully-
insured plans and self-insured plans as complements rather than
substitutes. One reason could be that insurers may use the same
Size Correlation provider network for both segments and higher enrollment in both
would enhance their bargaining power with providers. Another
We create two samples to examine the size correlation. The first likely explanation could be that some insurers may cross-subsidize
sample includes observations with non-negative number of lives between the two segments, as the cross-plan offsetting practice
in fully-insured plans and self-insured plans. The second sample by UnitedHealth Group. The MLR rule must be met by lines of
includes observations with non-negative lives in fully-insured plans insurance and by state in the fully-insured segment, so insurers
and non-negative self-insured fees. We include zero-values because cannot cross-subsidize across states or lines of insurance within the
some insurers choose to do fully-insured plans or self-insured plans fully-insured segment. Self-insured plans are exempt from the MLR
only while others may do both. rule, so insurers may have an incentive to cross-subsidize between
We calculate both the Pearson correlation and the Spearman self-insured and fully-insured segments, which may incentivize
correlation (23). The former uses actual data values and may be insurers to increase enrollment in both when one is already large.
influenced by outliers. The latter uses the ranks of data values Our results are also consistent with other studies. A study (24)
and is not skewed by outliers. Table 2 reports both correlation using the proprietary Clarivate Interstudy (a national proprietary
coefficients. The left panel shows the correlation between fully- census of health insurance market) reported that in 2021, Health
insured enrollment and self-insured enrollment and the right panel Care Service Corporation, Cigna, CVS Health, UnitedHealth
shows the correlation between fully-insured enrollment and self- Group, and Elevance Health, collectively enrolled 71 percent of
insured fees. the self-funded segment. Another study (22) using the proprietary
Fully-insured enrollment and self-insured enrollment are NAIC data also found that the top three TPA-insurers in 2022,
shown to be positively correlated and statistically significant in including CVS, Cigna, and Elevance, were among the five largest
all years (except in 2011 for Pearson correlation and 2023 for fully insured parent organizations that year.
Spearman correlation). Both the Pearson and Spearman correlation
coefficients between fully-insured enrollment and self-insured fees
are positive and statistically significant in all years. Since self- Expense Structure
insured fees are usually based on a flat per-member fee, a higher
The MLR data divides total expenses into three major
11 https://www.cms.gov/files/document/2024-mlr-form-instructions. categories: 1) quality improvement expense (which includes
pdf activities to prevent hospital readmission, improve patient safety
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TABLE 3 Expense Distribution: Self-insured (SI) vs. Fully-insured (FI: All Lines Combined) % of Expenses Spent on Quality Improvement (q), Claims
Adjustment (c), and General Administration (g).
Year Segments Mean values Segments Median values
%q %c %g %q %c %g
2011 SI 21% 54% 25% SI 18% 62% 13%
FI 8% 17% 75% FI 7% 16% 76%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗ ∗∗∗
t 3.23 7.14 −8.68 χ 2
4.70 27.24 24.53∗∗∗
2012 SI 21% 61% 18% SI 16% 64% 10%
FI 10% 18% 72% FI 9% 18% 73%
t 3.96∗∗∗ 11.14∗∗∗ −14.49∗∗∗ χ2 5.87∗∗ 42.57∗∗∗ 37.84∗∗∗
2013 SI 25% 60% 14% SI 17% 64% 10%
FI 12% 21% 67% FI 10% 21% 68%
∗∗∗ ∗∗∗ ∗∗∗ ∗ ∗∗∗
t 3.41 7.76 −14.74 χ 2
3.77 25.48 43.58∗∗∗
2014 SI 25% 53% 23% SI 26% 52% 19%
FI 11% 18% 71% FI 9% 19% 74%
t 7.15∗∗∗ 13.58∗∗∗ −15.54∗∗∗ χ2 37.19∗∗∗ 78.20∗∗∗ 83.69∗∗∗
2015 SI 25% 52% 23% SI 27% 50% 19%
FI 9% 18% 73% FI 6% 18% 75%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 9.71 14.26 −17.40 χ 2
53.85 89.84 84.13∗∗∗
2016 SI 24% 54% 22% SI 24% 55% 18%
FI 8% 20% 72% FI 8% 20% 72%
t 6.25∗∗∗ 10.03∗∗∗ −14.24∗∗∗ χ2 29.07∗∗∗ 44.70∗∗∗ 56.98∗∗∗
2017 SI 24% 50% 25% SI 28% 53% 14%
FI 12% 21% 67% FI 10% 21% 69%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 5.03 8.14 −10.24 χ 2
16.42 37.53 49.17∗∗∗
2018 SI 22% 52% 27% SI 21% 55% 15%
FI 1% 16% 82% FI 0% 15% 85%
t 8.41∗∗∗ 9.37∗∗∗ −12.07∗∗∗ χ2 37.15∗∗∗ 54.78∗∗∗ 54.78∗∗∗
2019 SI 20% 45% 35% SI 20% 54% 17%
FI 2% 19% 79% FI 0% 18% 82%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 6.95 6.95 −9.16 χ 2
24.60 39.34 47.00∗∗∗
2020 SI 17% 50% 33% SI 17% 58% 16%
FI 4% 19% 77% FI 0% 17% 77%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 6.76 7.88 −9.27 χ 2
21.15 43.99 46.10∗∗∗
2021 SI 16% 47% 37% SI 17% 57% 18%
FI 11% 24% 65% FI 8% 24% 66%
∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 2.43 6.13 −5.68 χ 2
8.64 35.64 33.81∗∗∗
2022 SI 15% 48% 38% SI 15% 58% 19%
FI 8% 23% 69% FI 5% 23% 72%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 3.98 7.02 −6.95 χ 2
24.60 35.43 35.43∗∗∗
2023 SI 16% 48% 36% SI 13% 59% 19%
FI 8% 22% 70% FI 4% 23% 73%
t 4.01∗∗∗ 7.28∗∗∗ −7.69∗∗∗ χ2 26.71∗∗∗ 36.97∗∗∗ 40.75∗∗∗
Data Source: Author’s analysis of the CMS MLR data.
∗∗∗ , ∗∗ , ∗ : significant at the 1%, 5%, and 10% level.
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FIGURE 1
Self-insured (SI) vs. Fully-insured (FI: All Lines Combined): Mean Values of % Expense Distribution. Data Source: Author’s analysis of the CMS MLR data.
and reduce medical errors, wellness and health promotion of general administration was as low as 14% in 2013 and reached
activities, and health information technology expenses related the peak of 38% in 2022 before declining slightly to 36% in 2023.
to health improvement); 2) claims adjustment expense (which Fully-insured plans also exhibited fluctuations in their expense
includes cost containment expenses not included in quality distribution, with an overall increase in the average share of claims
improvement expenses and all other claims adjustment expenses); administration and a decline in the other two categories.
and 3) general administration expense (which includes direct sales Table 3 also shows that self-insured plans on average spend
salaries and benefits, agents and brokers fees and commissions, higher percentages of expenses on quality improvement and claims
other taxes, other general and administrative expenses, and administration but lower percentage on general administration
community benefit expenditures). expense than fully-insured plans. The same pattern is also present
To compare the expense structure, we create two samples, when we examine the median values. To test whether such
one for fully-insured plans and another self-insured plans. For differences in each expense category between the two segments are
each sample, we include observations with non-negative values significant, we conduct t-test for mean values, and non-parametric
of quality improvement expense, claims adjustment expense, and Chi-square Mood test (25) for median values. The test statistics
general administration expense. We also remove data values that are reported in Table 3 and they are significant in every expense
are higher than the 99th percentile in the three expense categories. category and in all years.
Figure 1 provides a visual representation of the mean
shares. Each bar in the graph is divided into three sections
Expense distribution corresponding to the three expense categories. The top section
is general administration, the middle claims adjustment, and
Table 3 reports the percentage of total expenses spent on quality the bottom quality improvement. The graph indicates that fully-
improvement, claims adjustment, and general administration. The insured plans spend a higher percentage of expenses on general
left panel presents the mean values, and the right panel median administration but lower percentage on quality improvement and
values. Both the mean and median values show similar trends. claims adjustment.
Fully-insured plans spend the highest percentage of expenses
on general administration and self-insured plans on claims
adjustment. For instance, in 2011, the expense distribution for self-
insured plans was an average of 21% on quality improvement, Expense amount
54% on claims adjustment, and 25% on general administration;
for fully-insured plans, it was 8% on quality improvement, 17% Table 4 reports the mean and median values of total expenses
on claims adjustment, and 75% on general administration. The per-member-per-month (PMPM) and PMPM spending on quality
median values in the three expense categories for self-insured plans improvement, claims adjustment, and general administration. To
were 18%, 62%, and 13%, respectively. For fully-insured plans, the calculate PMPM values, we divide relevant expense amount by
median percentages were 7% on quality improvement, 16% on member months. All figures are adjusted for inflation and in
claims adjustment and 76% on general administration. 2023 dollars.
Both segments were also shown to have shifted their expense In 2011, self-insured plans spent a total of $10.86 in expense
distribution over the years. For self-insured plans, the average share per-member-per-month, of which $1.44 on quality improvement,
of quality improvement expenses went from 21% in 2011 to 16% $5.02 on claims adjustment, and $4.40 on general administration.
in 2023, peaking at 25% in 2013 and 2014; the average share of In contrast, fully-insured plans incurred a total expense of $22.34
claims adjustment expenses reached the highest of 60% in 2013 per-member-per-month, with $1.59 on quality improvement, $3.67
and dropped from 54% in 2011 to 48% in 2023; the average share on claims administration, and $17.08 on general administration.
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TABLE 4 Per-member-per-month (PMPM) Expense Amount (in 2023 Dollars): Self-insured (SI) vs. Fully-insured (FI: All Lines Combined) Amount of
Quality Improvement (q), Claims Adjustment (c), General Administration (g), and Overall Expense (o).
Year Segments Mean Value Segments Median Value
q c g o q c g o
2011 SI 1.44 5.02 4.40 10.86 SI 1.18 4.25 0.74 7.03
FI 1.59 3.67 17.08 22.34 FI 1.50 3.46 15.44 21.17
∗∗∗ ∗∗∗ ∗∗∗
t −0.51 1.31 −4.46 −3.41 χ 2
1.21 0.30 24.44 19.31∗∗∗
2012 SI 2.07 7.83 4.94 14.84 SI 1.73 5.13 0.93 9.29
FI 3.39 5.95 23.60 32.95 FI 2.64 5.17 22.86 30.88
t −3.05∗∗∗ 1.39 −8.49∗∗∗ −5.32∗∗∗ χ2 5.58∗∗ 0.00 34.87∗∗∗ 15.50∗∗∗
2013 SI 1.66 4.99 1.21 7.86 SI 1.34 5.23 0.52 7.54
FI 3.52 6.80 80.59 90.92 FI 2.68 5.34 20.08 30.56
∗∗∗ ∗ ∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t −4.11 −1.76 −2.13 −2.23 χ 2
8.10 0.17 42.33 37.21∗∗∗
2014 SI 1.63 4.31 1.24 7.18 SI 1.33 3.45 0.87 5.67
FI 3.77 6.44 25.98 36.19 FI 2.87 4.88 23.38 31.30
t −5.91∗∗∗ −2.79∗∗∗ −16.29∗∗∗ −13.76∗∗∗ χ2 29.18∗∗∗ 2.75∗ 95.46∗∗∗ 78.04∗∗∗
2015 SI 1.68 4.05 1.73 7.46 SI 1.54 3.24 1.04 6.49
FI 2.26 5.25 25.01 32.51 FI 1.96 4.85 22.66 28.58
∗∗∗ ∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t −2.66 −2.23 −13.28 −12.81 χ 2
2.15 9.56 86.08 74.42∗∗∗
2016 SI 1.63 4.10 1.86 7.59 SI 1.43 3.98 1.12 7.52
FI 2.45 6.34 26.27 35.07 FI 2.24 5.52 21.73 31.88
t −3.42∗∗∗ −3.83∗∗∗ −11.69∗∗∗ −11.48∗∗∗ χ2 9.31∗∗∗ 4.14∗∗ 66.24∗∗∗ 66.24∗∗∗
2017 SI 2.09 4.82 3.59 10.51 SI 1.96 4.04 0.85 8.46
FI 3.75 6.84 24.32 34.92 FI 3.91 7.30 22.76 37.15
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗ ∗∗∗
t −5.34 −3.09 −10.62 −10.45 χ 2
30.05 6.54 58.89 53.42∗∗∗
2018 SI 1.80 4.99 2.30 9.09 SI 1.77 4.38 1.10 8.40
FI 0.28 6.23 48.17 54.69 FI 0.00 6.26 34.83 41.88
t 5.99∗∗∗ −1.57 −3.51∗∗∗ −3.46∗∗∗ χ2 26.21∗∗∗ 6.70∗∗∗ 50.73∗∗∗ 33.20
2019 SI 1.63 5.87 7.72 15.22 SI 1.26 3.97 1.12 8.27
FI 0.56 7.17 34.06 41.79 FI 0.00 6.50 34.14 41.23
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 3.60 −1.03 −4.19 −3.77 χ 2
10.88 6.58 50.08 32.75∗∗∗
2020 SI 1.48 5.11 8.10 14.69 SI 1.32 4.01 1.12 7.68
FI 0.69 6.10 26.92 33.71 FI 0.00 4.83 23.19 27.83
∗∗∗ ∗∗∗ ∗∗∗ ∗∗ ∗∗∗
t 2.97 −0.94 −2.96 −2.88 χ 2
4.03 0.26 58.59 30.84∗∗∗
2021 SI 1.95 6.72 9.05 17.72 SI 1.77 4.29 1.34 8.12
FI 3.77 8.85 26.16 38.79 FI 3.30 8.62 23.16 37.16
∗∗∗ ∗∗∗ ∗∗∗ ∗∗ ∗∗∗ ∗∗∗
t −4.07 −1.37 −2.74 −3.21 χ 2
4.72 10.30 54.14 49.17∗∗∗
2022 SI 2.33 7.61 12.67 22.61 SI 1.49 4.16 1.38 7.81
FI 3.40 10.60 35.65 49.65 FI 2.88 11.26 31.37 47.69
∗ ∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t −1.51 −1.71 −2.59 −2.93 χ 2
21.03 21.03 63.72 53.33∗∗∗
2023 SI 2.10 8.35 3.41 13.86 SI 1.45 4.49 1.52 8.37
FI 3.38 12.87 46.29 62.54 FI 2.50 11.42 41.69 59.26
t −1.85∗ −2.04∗∗ −10.46∗∗∗ −9.25∗∗∗ χ2 8.15∗∗∗ 29.68∗∗∗ 81.25∗∗∗ 81.25∗∗∗
Data Source: Author’s analysis of the CMS MLR data.
∗∗∗ , ∗∗ , ∗ : significant at the 1%, 5%, and 10% level.
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FIGURE 2
Self-insured (SI) vs. Fully-insured (FI: All Lines Combined) Median Value of PMPM Expense Amount (in 2023 $). Data Source: Author’s analysis of the
CMS MLR data.
TABLE 5 Correlation between fully insured plans (Group Market Only)
We observe similar trends for both mean and median values.
and self-insured plans.
Self-insured plans spend the most dollars on claims adjustment and
fully-insured plans on general administration, which is consistent Year Fully-insured Fully-insured
with the expense distribution discussed earlier. Enrollment vs. Enrollment vs.
Fully-insured plans incur higher general administration Self-insured Enrollment Self-insured Fees
expenses and higher total expenses than self-insured plans Pearson Spearman Pearson Spearman
in all years (both the t-tests of difference in mean values 2011 0.1070 0.2675 ∗∗
0.2120 ∗
0.2800∗∗
and Mood tests of difference in median values are significant
2012 0.2988∗∗∗ 0.3958∗∗∗ 0.3158∗∗∗ 0.4083∗∗∗
every year).
With regard to quality improvement expenses, fully-insured 2013 0.2092∗∗ 0.3056∗∗∗ 0.2835∗∗∗ 0.3715∗∗∗
plans are also shown to spend more than self-insured plans 2014 0.2676∗∗∗ 0.2001∗∗ 0.2905∗∗∗ 0.2361∗∗∗
in almost all years, an observation consistent with previous
2015 0.4852∗∗∗ 0.2733∗∗∗ 0.6011∗∗∗ 0.3315∗∗∗
studies (14, 15). The differences between mean values are
significant every year except in 2011 and 2022; the differences 2016 0.4463∗∗∗ 0.3558∗∗∗ 0.5595∗∗∗ 0.4410∗∗∗
between median values are significant every year except in 2011 2017 0.3952∗∗∗ 0.2721∗∗ 0.5826∗∗∗ 0.3131∗∗∗
and 2015.
2018 0.4259∗∗∗ 0.1558 0.6000∗∗∗ 0.3221∗∗∗
For claims adjustment expenses, fully-insured plans also spend
2019 0.4621∗∗∗ 0.1456 0.4878∗∗∗ 0.3273∗∗∗
more than self-insured plans but test statistics (t and Chi-square)
are only significant in a little over half the study period. 2020 0.4945∗∗∗ 0.3095∗∗∗ 0.5344∗∗∗ 0.4133∗∗∗
Figure 2 shows the median values. The numerical values shown 2021 0.5005∗∗∗ 0.1811∗ 0.5449∗∗∗ 0.3147∗∗∗
in the graph are median values of PMPM total expenses, and
∗∗∗ ∗∗ ∗∗∗
2022 0.5249 0.2129 0.5732 0.4008∗∗∗
the bars indicate the breakdown of expenses. Each bar is divided
into three sections corresponding to the PMPM dollar amounts 2023 0.5394∗∗∗ 0.2182∗∗ 0.5852∗∗∗ 0.3938∗∗∗
spent on quality improvement, claims adjustment, and general Data Source: Author’s analysis of the CMS MLR data.
∗∗∗ , ∗∗ , ∗ : significant at the 1%, 5%, and 10% level.
administration. Note that the bar heights are not necessarily the
same as the figures on top because median values of the three
expense categories do not necessarily add up to the median value
of the total expenses. The graph shows that fully-insured plans Robustness Study
spend the most on general administration and self-insured plans on
claims adjustment. We also note that there is not much variation in We also replicate our study using a different set of fully insured
the median value of PMPM total expenses incurred by self-insured plans that removes the individual markets. In other words, the
plans as they ranged from $5.67 in 2014 to $9.29 in 2012. Fully- new set of fully insured plans covers commercial group (including
insured plans however exhibit more fluctuation and an overall comprehensive small group market, commercial large group, mini-
increasing trend, with the median values of PMPM total expenses med small group market, mini-med large group market, expatriate
increasing from the lowest of $21.17 in 2011 to the highest of $59.26 small group market, and expatriate large group market) and
in 2023. the Federal Employees Health Benefits (FEHB) Program, which
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TABLE 6 Expense Distribution: Self-insured (SI) vs. Fully-insured (FI: Group Market Only) % of Expenses Spent on Quality Improvement (q), Claims
Adjustment (c), and General Administration (g).
Year Segments Mean values Segments Median values
%q %c %g %q %c %g
2011 SI 21% 54% 25% SI 18% 62% 13%
FI 9% 17% 74% FI 8% 17% 75%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗ ∗∗∗
t 3.04 7.20 −8.60 χ 2
4.07 25.42 25.42∗∗∗
2012 SI 21% 61% 18% SI 16% 64% 10%
FI 11% 19% 71% FI 9% 18% 71%
t 3.75∗∗∗ 11.02∗∗∗ −14.19∗∗∗ χ2 4.23∗∗ 42.78∗∗∗ 38.03∗∗∗
2013 SI 25% 60% 14% SI 17% 64% 10%
FI 12% 23% 65% FI 11% 21% 66%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 3.30 7.45 −14.05 χ 2
2.60 26.24 43.24∗∗∗
2014 SI 25% 53% 23% SI 26% 52% 19%
FI 12% 19% 69% FI 9% 20% 73%
t 6.69∗∗∗ 11.44∗∗∗ −14.86∗∗∗ χ2 38.06∗∗∗ 79.54∗∗∗ 82.90∗∗∗
2015 SI 25% 52% 23% SI 27% 50% 19%
FI 10% 19% 71% FI 7% 19% 74%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 8.11 13.92 −15.71 χ 2
45.61 90.55 84.80∗∗∗
2016 SI 24% 54% 22% SI 24% 55% 18%
FI 10% 20% 71% FI 8% 20% 71%
t 5.66∗∗∗ 10.09∗∗∗ −13.63∗∗∗ χ2 25.69∗∗∗ 49.13∗∗∗ 56.98∗∗∗
2017 SI 24% 50% 25% SI 28% 53% 14%
FI 12% 22% 65% FI 10% 22% 69%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 4.57 7.55 −9.39 χ 2
15.90 36.82 45.72∗∗∗
2018 SI 22% 52% 27% SI 21% 55% 15%
FI 2% 18% 80% FI 0% 15% 85%
t 8.13∗∗∗ 8.53∗∗∗ −11.22∗∗∗ χ2 29.26∗∗∗ 45.26∗∗∗ 53.78∗∗∗
2019 SI 20% 45% 35% SI 20% 54% 17%
FI 3% 19% 78% FI 0% 18% 82%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 6.33 6.80 −8.77 χ 2
15.85 38.36 44.03∗∗∗
2020 SI 17% 50% 33% SI 17% 58% 16%
FI 4% 20% 75% FI 0% 17% 77%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 6.32 7.11 −8.54 χ 2
16.81 43.03 43.03∗∗∗
2021 SI 16% 47% 37% SI 17% 57% 18%
FI 14% 26% 60% FI 10% 27% 63%
∗∗∗ ∗∗∗ ∗∗ ∗∗∗
t 1.07 5.48 −4.63 χ 2
4.82 31.05 27.40∗∗∗
2022 SI 15% 48% 38% SI 15% 58% 19%
FI 10% 25% 65% FI 6% 25% 66%
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 3.07 6.17 −5.98 χ 2
16.47 28.99 30.92∗∗∗
2023 SI 16% 48% 36% SI 13% 59% 19%
FI 9% 27% 64% FI 5% 27% 66%
t 3.18∗∗∗ 6.03∗∗∗ −6.31∗∗∗ χ2 18.65∗∗∗ 34.35∗∗∗ 38.06∗∗∗
Data Source: Author’s analysis of the CMS MLR data.
∗∗∗ , ∗∗ , ∗ : significant at the 1%, 5%, and 10% level.
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FIGURE 3
Self-insured (SI) vs. Fully-insured (FI: Group Market Only): Mean Values of % Expense Distribution. Data Source: Author’s analysis of the CMS MLR data.
provides benefits to nearly 8.3 million federal enrollees and Discussion and Policy Implication
dependents and is the largest employer sponsored health plans of
its kind (26). Using a publicly available data source, we examine self-insured
Table 5 presents the size correlation results. Both the Pearson plans and fully-insured plans in terms of their enrollment and
and the Spearman correlation coefficients are positive and expense structure. We find that higher enrollment in the fully-
significant in all years between fully-insured enrollment and insured segment is associated with higher enrollment and fees in
self-insured fees. As for the correlation between fully-insured the self-insured segment, an observation consistent with the fact
enrollment and self-insured enrollment, the Pearson correlation that top health insurers in the fully-insured segment are also major
coefficients are positive and significant except in 2011 and the TPAs of self-insured plans.
Spearman correlation coefficients are also positive and significant Additionally, we find that self-insured plans spend less expenses
except in 2018 and 2019. Again, this shows that a larger fully- per member per month when compared to fully-insured plans. Our
insured segment is associated with a larger self-insured segment. study however does not prescribe a reason. It is unclear whether
Table 6 shows the same trend of expense distribution as in lower expenses in the self-insured segment are insurers skimping
Table 3 with self-insured plans spending a higher percentage of on cost, hiding expenses in claims, reallocating funds from self-
expenses on quality improvement and claims adjustment but insured plans to cross-subsidize their fully-insured plans, or being
lower percentage on general administration than fully-insured more cost-effective. More data about insurers’ TPA practices would
plans. Both the t-test and Mood test statistics are significant be required to decipher the causes for lower expenses in self-insured
in all years (except in 2021 with mean value for quality plans. Future study may link the MLR data to insurers’ financial
improvement expense share and 2013 with median value for quality statements to examine what kind of insurers (with regard to specific
improvement expense). Figure 3 presents a visual depiction of the firm characteristics) may be more likely to lower expenses in their
mean values. self-insured segment than fully-insured segment. Research is also
Table 7 reports the PMPM amount spent (in 2023 dollars) warranted to study the possible consequences of the lower expenses
in the three expense categories. We note similar trends to those in self-insured plans for employers and plan beneficiaries.
presented in Table 5. Fully-insured plans spend more on general Our study also shows that insurers exhibit different expense
administration and total expenses (the test statistics are significant structure in its risk-bearing segment and risk-free segment. Self-
in all years). Except in 2011 and 2020 (for mean values) and 2020 insured plans spend a higher percentage on quality improvement
(for median values), fully-insured plans also incur higher quality and claims adjustment but a lower percentage on general
improvement expenses than self-insured plans with significant test administration than fully-insured plans. The results are largely
statistics. As for claims adjustment expenses, fully-insured plans the same regardless of whether we include individual markets
are shown to spend more with statistical significance in all years in the fully insured plans. Assuming there is no expense
except in 2011, 2012, and 2019 for mean values and 2011–2013 for manipulation or cross-subsidization between the fully-insured and
median values. self-insured segments, this would be welcome news for employers
Figure 4 shows the median values. When we compare it to if their TPAs focus more on quality improvement and claims
Figure 2, we also note that fully insured plans that only include adjustment than general administration, which is another topic for
group markets incur higher total expenses and in each expense future study.
category in almost all years than fully insured plans that include While our observational study does not set out to examine
all lines (both individual and group markets). the causes and consequences of the reported patterns, our findings
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TABLE 7 Per-member-per-month (PMPM) Expense Amount (in 2023 Dollars): Self-insured (SI) vs. Fully-insured (FI: Group Market Only) Amount of
Quality Improvement (q), Claims Adjustment (c), General Administration (g), and Overall Expense (o).
Year Segments Mean Value Segments Median Value
q c g o q c g o
2011 SI 1.44 5.02 4.40 10.86 SI 1.18 4.25 0.74 7.03
FI 1.98 4.26 17.70 23.94 FI 1.86 4.19 15.62 23.04
∗∗∗ ∗∗∗ ∗∗ ∗∗∗
t −1.65 0.71 −5.13 −4.13 χ 2
4.32 0.02 25.42 18.46∗∗∗
2012 SI 2.07 7.83 4.94 14.84 SI 1.73 5.13 0.93 9.29
FI 3.62 6.69 26.87 37.17 FI 2.76 5.58 24.23 33.12
t −3.60∗∗∗ 0.85 −9.45∗∗∗ −6.29∗∗∗ χ2 7.59∗∗∗ 0.15 38.03∗∗∗ 15.50∗∗∗
2013 SI 1.66 4.99 1.21 7.86 SI 1.34 5.23 0.52 7.54
FI 3.82 8.01 96.17 108.00 FI 2.95 6.10 20.91 33.64
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t −4.68 −2.79 −2.26 −2.40 χ 2
13.12 1.37 43.24 36.87∗∗∗
2014 SI 1.63 4.31 1.24 7.18 SI 1.33 3.45 0.87 5.67
FI 4.00 7.22 27.55 38.77 FI 3.06 6.18 24.62 34.31
t −6.67∗∗∗ −3.65∗∗∗ −18.43∗∗∗ −15.70∗∗∗ χ2 41.05∗∗∗ 10.77∗∗∗ 82.90∗∗∗ 90.86∗∗∗
2015 SI 1.68 4.05 1.73 7.46 SI 1.54 3.24 1.04 6.49
FI 2.54 5.65 25.98 34.16 FI 2.31 5.22 23.18 31.02
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t −3.86 −2.98 −13.28 −13.49 χ 2
13.71 13.71 84.80 79.92∗∗∗
2016 SI 1.63 4.10 1.86 7.59 SI 1.43 3.98 1.12 7.52
FI 2.81 7.04 30.44 40.29 FI 2.74 7.07 24.47 33.51
t −5.01∗∗∗ −4.99∗∗∗ −12.44∗∗∗ −12.72∗∗∗ χ2 19.44∗∗∗ 16.56∗∗∗ 56.98∗∗∗ 66.24∗∗∗
2017 SI 2.09 4.82 3.59 10.51 SI 1.96 4.04 0.85 8.46
FI 4.01 7.77 25.90 37.68 FI 3.95 8.37 26.57 40.16
∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t −6.34 −4.05 −11.29 −11.97 χ 2
33.54 12.91 45.72 58.11∗∗∗
2018 SI 1.80 4.99 2.30 9.09 SI 1.77 4.38 1.10 8.40
FI 0.54 7.79 50.46 58.79 FI 0.00 6.58 35.00 42.77
t 3.90∗∗∗ −3.30∗∗∗ −3.62∗∗∗ −3.74∗∗∗ χ2 16.95∗∗∗ 10.25∗∗∗ 53.78∗∗∗ 41.01∗∗∗
2019 SI 1.63 5.87 7.72 15.22 SI 1.26 3.97 1.12 8.27
FI 0.89 7.85 35.54 44.27 FI 0.00 7.15 34.56 43.16
∗ ∗∗∗ ∗∗∗ ∗∗ ∗∗∗ ∗∗∗
t 1.95 −1.57 −4.44 −4.19 χ 2
5.19 7.48 44.03 40.71∗∗∗
2020 SI 1.48 5.11 8.10 14.69 SI 1.32 4.01 1.12 7.68
FI 1.45 7.24 31.74 40.43 FI 0.00 5.96 28.90 36.46
∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t 0.07 −2.41 −3.70 −3.96 χ 2
1.41 7.01 43.03 53.82∗∗∗
2021 SI 1.95 6.72 9.05 17.72 SI 1.77 4.29 1.34 8.12
FI 4.53 10.18 27.02 41.73 FI 4.03 10.90 25.34 39.37
∗∗∗ ∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t −5.51 −2.27 −2.84 −3.67 χ 2
19.01 22.17 27.40 56.24∗∗∗
2022 SI 2.33 7.61 12.67 22.61 SI 1.49 4.16 1.38 7.81
FI 3.97 12.68 59.90 76.55 FI 3.01 12.88 31.21 46.61
∗∗ ∗∗∗ ∗ ∗∗ ∗∗∗ ∗∗∗ ∗∗∗
t −2.27 −2.86 −1.82 −2.04 χ 2
20.69 23.92 30.92 69.16∗∗∗
2023 SI 2.10 8.35 3.41 13.86 SI 1.45 4.49 1.52 8.37
FI 3.99 16.21 55.31 75.52 FI 2.89 17.07 42.20 63.46
t −2.62∗∗∗ −3.50∗∗∗ −6.91∗∗∗ −7.47∗∗∗ χ2 18.29∗∗∗ 43.30∗∗∗ 38.06∗∗∗ 84.86∗∗∗
Data Source: Author’s analysis of the CMS MLR data.
∗∗∗ , ∗∗ , ∗ : significant at the 1%, 5%, and 10% level.
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FIGURE 4
Self-insured (SI) vs. Fully-insured (FI: Group Market Only) Median Value of PMPM Expense Amount (in 2023 $). Data Source: Author’s analysis of the
CMS MLR data.
shed new lights on the self-insured segment of the health insurance Data availability statement
industry, an understudied field despite the segment’s prevalence.
As more employers self-insure their employers’ healthcare cost, The raw data supporting the conclusions of this article will be
it is imperative that they monitor their TPA’s management of made available by the authors, without undue reservation.
their health plans. The ERISA requires employer to fulfill their
fiduciary duty to plan beneficiaries. Mis-management of health
plans will expose the employer to lawsuits by their own employees Author contributions
(27). Wells Fargo (28) and JP Morgan (29) are just two examples
of companies being sued by their workers for overspending YL: Conceptualization, Data curation, Formal analysis,
on health benefits that resulted in higher out of pocket Funding acquisition, Investigation, Methodology, Project
expenses for employees. Both companies used TPA to manage administration, Resources, Software, Supervision, Validation,
healthcare benefits. Visualization, Writing – original draft, Writing – review & editing.
Our study helps employers, policymakers, and researchers
understand more about self-insured plans’ expense behavior. To
address the bigger question raised in the introduction section
Funding
regarding whether insurers cross-subsidize fully-insured plans at
The author(s) declared that financial support was received for
the expense of self-insured plans, we would also require claims data
this work and/or its publication. The author received an internal
and other pertinent information such as how TPAs compensate
grant from the Barney School of Business, University of Hartford.
their subtractors. The Consolidated Appropriations Act of 2021
(30) removed the gag clause that’d prevent TPAs from sharing
claims data, but the law does not obligate TPAs to provide Conflict of interest
such data (31). TPAs are reportedly still hindering employer
efforts to monitor claims cost (32). Pulse of the Purchaser, a The author(s) declared that this work was conducted in the
national survey of employers, reported that a third of employers absence of any commercial or financial relationships that could be
surveyed in 2025 are still struggling to get their TPAs to provide construed as a potential conflict of interest.
information about their own claims data (33). Without such data,
employers would not be able to examine the claims cost and
expenses, much less evaluate whether their TPAs are acting in their Generative AI statement
best interest.
Policymakers may consider requiring TPAs to provide claims The author(s) declared that generative AI was not used in the
data and other pertinent information to allow employers to evaluate creation of this manuscript.
TPA’s effectiveness in managing their health plans. The MLR Any alternative text (alt text) provided alongside figures in
data used in the study does not contain the proprietary financial this article has been generated by Frontiers with the support of
information of insurers (such as their assets and liabilities). More artificial intelligence and reasonable efforts have been made to
publicly available data will also assist researchers in the study of the ensure accuracy, including review by the authors wherever possible.
self-insured segment. If you identify any issues, please contact us.
Frontiers in Public Health 12 frontiersin.org
Lei 10.3389/fpubh.2026.1651982
Publisher’s note organizations, or those of the publisher, the editors and the
reviewers. Any product that may be evaluated in this article, or
All claims expressed in this article are solely those of the claim that may be made by its manufacturer, is not guaranteed or
authors and do not necessarily represent those of their affiliated endorsed by the publisher.
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Frontiers in Public Health 13 frontiersin.org
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