via Wall Street Journal

Most of the 275 million Americans with health benefits probably see the logo on the corner of their insurance card and think that’s who has them covered. But for almost 100 million of them—the majority of Americans who get coverage through work—the true insurer is noted somewhere else: on their business card. It’s called self-insurance, and the Obama administration seems interested in curtailing the practice to shore up the Affordable Care Act’s health-insurance exchanges.

Here’s how self-insurance works: Rather than pay an insurer to cover employees’ medical expenses, companies cover claims themselves. Since there’s no middleman, the employer keeps the money that would otherwise go to the insurer’s profits. Often the company will contract with a third party to process and administer claims—hence the big insurer’s logo on many of those ID cards.

One advantage of self-insurance is that it allows employers greater flexibility to tailor benefits. A tech firm with mostly young employees, for instance, might bolster its family-planning coverage, everything from contraception to top-notch care for high-risk pregnancies. A manufacturer employing an older workforce might hire an on-site health coach to help workers lose weight..

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