Module 1
How Commercial Coverage Works
Employers cover 154 million people, two-thirds of them in plans where the employer pays the claims. Who holds the risk, and which rules reach them.
By the end of this module, you will be able to:
- Explain why the employer contribution is economically borne by workers
- Distinguish self-funded from fully insured arrangements and what each permits
- Describe what ERISA preemption enables and what it forecloses
- The Employer as Purchaser Employers cover 154 million people and buy their care with money that would otherwise be wages. Understanding who actually pays explains most employer behavior. About 5 min
- Self-Funded and Fully Insured Two-thirds of covered workers are in plans where the employer pays the claims. Who holds the risk determines who can change anything. About 5 min
- ERISA and What It Preempts One 1974 statute decides which rules reach a self-funded employer plan. It creates both the freedom to innovate and the limits on state reform. About 5 min
Module quiz
Answer all questions to see your score.
1. Why is the visible worker premium contribution an understatement of what employees pay?
An employer that overpays for care is spending its workers' money rather than its own, which is the foundation of the fiduciary framing in Module 4.
2. Which employer can contract directly with a health system for its own population?
A fully insured employer can change carriers and plan design but does not hold the risk or the data, which is why nearly every innovation in this course appears at large self-funded employers first.
3. What is the effect of ERISA preemption on state cost-control laws?
The Department of Labor almost exclusively regulates private self-insured plans. This is why all-payer experiments have concentrated in Medicare and Medicaid rather than spanning every payer.