Carriers earn more profit on self- insured products

January 22, 2025

Group Market Insurance Enrollment 2010-2022

Source: Abraham, Health Affairs, December. 2024. Does not include United HealthCare

Two-thirds (65%) of employees with employer sponsored health plans are in self-insured programs, otherwise known as Administrative Services Only (ASO). Researchers in the December issue of Health Affairs used a database from state insurance commissioners to evaluate the enrollment and profitability of employees in ASO and fully-insured health plans.

The three largest ASO insurers are Elevance Health (formerly Anthem), Cigna Health, and CVS Group (Aetna Group). The researchers told me (PL) that they did not include United Health Care because it does not register its self-insured accounts in the same way in state insurance commission databases. Collectively, these three organizations cover more than 70 million lives. This research did not include Medicaid or Medicare covered lives.

Elevance (Anthem), Cigna, and CVS (Aetna) had lower median ASO fees compared to other ASO contractors ($190 versus $258), but they were far more profitable. Median profits per enrollee in these three plans were $40 per member per year, while other carriers lost $13 per member per year on their ASO accounts. This means that the smaller ASO carriers have higher administrative expenses. The aggregate profit of these three plans was five times their underwriting gains from fully-insured policies ($3.46 billion versus $705 million) during the study period.

The increasing market share and profits of the largest ASO insurers indicates that they will continue to exert their influence on employers and the health marketplace at-large in the coming years.

Source: Abraham, Health Affairs, December. 2024. Does not include United HealthCare

Implications for employers:

- A growing number of employers are using ASO administrators for their health benefits.
- The largest ASO organizations have increasing market leverage over employers as customers. Unfortunately, they don’t have enough leverage to drive lower prices in many markets where providers are very consolidated.

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