We have an insurance plan through my husband's work. The premium keeps going up, and the coverage drops. He works for a large hospital, and the plan they carry is their own. We can't use outside doctors or have any services performed outside the hospital environment. If I went to a doctor and he decided I needed an X-ray that he could do in his office, our plan would pay only 50 percent, but it would pay 80 percent if I went to the hospital to do it -- which usually means a two- to three-week wait for an appointment. Is there a way to require this employer to offer more than one plan?

Rose

From the description of your concerns, it appears that your husband's employer offers a health plan that is self-funded. This means that the health plan is not insurance; rather, the employer pays for health care costs as they are incurred. Although the plan is not insurance, the employer may carry "stop-loss" insurance to reduce the financial risk of catastrophic health care costs in any given year.
Many types of companies use self-funded plans. In this case, it is coincidental that the employer is also a hospital, with medical facilities that employees can use. Evidently, the hospital plan administrator has decided that is it more cost-effective to use certain medical facilities to provide services to employees. In your X-ray example, it is obvious that the hospital believes it can save considerable money by using its own facilities -- hence the incentive for patients to use the hospital radiology department. In this way, the plan is not much different than many HMOs that require the use of specific facilities. If the wait is excessive, however, you should talk to the plan administrator to see if the hospital can provide more efficient services. In the case where a doctor can perform diagnostics right in the office, it may be wise to spend a little extra money for faster service.

Why would an employer administer a self-funded plan? One reason is control; another is cost. By self-funding and contracting for stop-loss coverage, an employer can control the health plan and fashion it to be advantageous to the employer and, hopefully, the employees. By self-funding, an employer does not have to settle for an "off-the-shelf" health plan available in the insurance market. This also helps the employer control costs. With a self-funded plan, an employer pays only for medical services actually rendered, under the protection of the stop-loss insurance, and does not simply pay premiums for services that may never be used.

There is another important advantage to a self-funded plan. Insurance is regulated at the state level. For a large employer with a presence in several states, this can create an administrative nightmare. Even if a large employer is in one state only, dealing with regulatory requirements can be annoying. By self-funding, the employer falls under the regulatory aegis of the U.S. Department of Labor. The DOL still has requirements for self-funded plans, but it is easier to deal with a single regulatory agency for this and other labor issues than to deal with state regulators also.

The law that governs employers' self-funded plans and pensions is known as ERISA -- the Employee Retirement Income Security Act. President Gerald R. Ford signed the law on Sept. 2, 1974, giving workers the first federal labor law that created pension and health insurance rules. The Labor Department has jurisdiction over ERISA and protects the assets of plans and the rights of workers and their families to pension, health and other employee benefits.

There is no requirement under ERISA for employers to offer more than one plan. If the employer did offer an optional plan, it would probably be more expensive than the one you have. If it really does take two or three weeks to get an appointment for hospital facilities, it may be to your advantage simply to pay the extra money for using non-plan facilities when you need them.

Among many other interesting statistics available from the DOL is one that relates to your question -- the cost of health benefits for employees. In 1982, 71 percent of health plan participants were in plans financed entirely by their employer. In 1997, only 31 percent of workers with health coverage were in plans in which the employer paid the entire cost of single coverage. In other words, employees now are paying more of the bill than before. Unfortunately, as the cost of medical care increases, so does the cost health coverage. This, by the way, indicates that insurance companies are not pulling their premiums out of thin air. Even those who are not covered by insured plans are paying more.

Talk to the plan administrator. Share your concerns and ask what can be done to make the process more efficient.