Employer stop-loss market considerations for health plans

Over the past decade, submitted financial filings suggest the employer stop-loss (ESL) market has nearly tripled, growing from roughly $7 billion in premium in 2008 to over $21 billion in 2018. As this growth has occurred, a significant share of it has accrued to health plans rather than traditional ESL carriers. While there can be hurdles for a health plan to overcome when trying to enter the ESL market or expand an existing stop-loss block, the market can provide meaningful opportunities.

Since 2006, when health plans represented just over one-third of the ESL marketplace, health plans have grown to represent nearly 60% of the market. A majority of this growth in that time period has been concentrated in large, national health plans, whose market share has more than doubled, from 16% to 33%.

The ESL market is different from the fully insured market that comprises the majority of most health plans’ premiums. As such, it is important that health plans wishing to enter (or grow in) the market understand the ramifications of the decision.

In this paper, Milliman’s Rob Bachler and RGA’s David Sipprell enumerate the considerations health plans should examine before diving into the ESL market.