Rewind: How “Self Insurance” Can Confuse Anyone

President Obama has something new in common with millions of workers in the United States.

He doesn’t appear to understand what it means for a company to be “self insured” any better than workers who still get confused by who pays for what in health care.

Getting employees to understand self insurance is a challenge for any company.

Workers find it difficult to “get” that – when a company is self insured – the insurance company only administers claims while the company offering the coverage pays its share of the cost out of its pockets.

For years, employers have tried every possible way to help employees understand this concept but most find it a surprisingly tough issue to communicate. Something about seeing an insurance company’s name triggers the conventional idea among workers that the insurance company pays the bill even when the communications emphasize that, for the self insured, an insurance company only administers.

The President doesn’t seem to understand this, either.

This week, as he put together a compromise in his journey into anger management with the Catholic church, he (and his staff) suggested a seemingly simple remedy to the illness they created to require benefit plans to offer reproductive medications. The President said, simply, “we will have the insurance companies pay for it”.

Problem is that, for self-insured plans – including many affected by the President’s actions – this announcement does nothing. An insurance company, for a self-insured plan, pays nothing on its own, it only administers a company’s money. So the President, in his effort to soothe the pain, only made the injury more confusing.

For any leader, clarity is a challenge, because topics are complex, conventions are difficult to change, and ambiguity can be more comfortable. Saying “we will have the insurance companies pay” may have felt better at the moment but, as when we receive the wrong medication, what ails will soon return.

Now the President, like so many workers, may realize how confusing self insurance can be.

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