If you’re feeling squeezed by rising health insurance costs, you’ve probably heard about self-funding. Maybe your current advisor even suggested moving to an ASO (Administrative Services Only) model. Sounds good in theory, right? More control, better budgeting, potential savings. But ASO might not deliver the results you’re actually looking for.
The ASO Reality Check
Most employers who start exploring self-funding end up transitioning from their fully-insured plan to a partially self-funded ASO model with the same carrier. The pitch is appealing. You’ll have more control over your healthcare budget and costs. But here’s the rub: when your self-funded plan is ASO, your carrier still controls everything that actually matters.
Think about it. They’re still running the administration, providing the stop-loss insurance, managing your pharmacy benefits, and controlling the provider network. You’re essentially paying them to do what they were doing before, just with a different label on it. And with that control often comes the same problems you were trying to escape, poor data visibility and the annual cost increases.
Why ASO Falls Short for True Cost Control
Your advisor probably positioned ASO as the solution to your cost problems. But if cost control is your real objective, ASO may not be the best fit. Sure, it’s a step in the right direction, but it’s like taking one step forward when you need to take three.
Your carrier is still making decisions based on what’s best for their shareholders, not what’s best for your employees or your bottom line. They have little incentive to help you truly control costs because, frankly, higher healthcare spending means higher revenue for them. It’s a misaligned incentive that most employers never think to question.
The Unbundled Alternative: True Cost Control
If you want real cost control and long-term savings, you need to look at an unbundled approach. Instead of letting one carrier control every aspect of your plan, you partner with separate, specialized providers for each component:
- A Third Party Administrator (TPA) that focuses solely on efficient administration
- A stop-loss carrier that’s competitive and transparent
- A Pharmacy Benefit Manager (PBM) that actually works in your favor
When you unbundle, you can align with partners who have your best interests in mind, not shareholders demanding quarterly profit growth. Each provider is focused on their specialty, competing for your business based on performance and value.
What Your Current Advisor Isn’t Telling You
Most advisors won’t suggest unbundling because it’s harder for them. It requires actual expertise, ongoing management, and rolling up their sleeves to do real work. It’s much easier to move you to ASO with your current carrier, collect their commission, and call it a day.
But you deserve better than lazy advice that serves their interests instead of yours.
The Bottom Line
ASO self-funding isn’t necessarily bad, but it might not be the solution you think it is. If you’re serious about controlling healthcare costs for the long term, you need to be willing to look beyond the easy options your current advisor is presenting.
Before making any decisions, ask yourself: what are you really trying to achieve? If it’s true cost control and transparency, there are better paths forward than staying comfortable with the same carrier running your show.
DM me for more information about how unbundled self-funding could work for your organization.