financial and other evaluation of proposals received, and advice on design of health promotion and other specialized programs. Some larger employers want to get deeply involved in the details of program design and management, whereas others want, by and large, to hand off the tasks to consultants and others.

Owners or office managers of smaller organizations are likely to rely on insurance agents or brokers for advice and assistance.1 Depending on the health status and claims expense profiles presented by the organization, its financial strength, and its geographic location, finding an insurer may range from simple to impossible.

Suppliers of Health Insurance, Administrative, and Other Services

Even the largest employers rarely carry out internally all the tasks necessary to operate a health benefit program. For the most basic function of claims administration, 9 out of 10 self-insured firms contract with one of the hundreds of independent or insurer-owned third-party administrators (TPAs) (Woolsey, 1992a). Many of the well over 1,000 commercial insurance companies and the 73 Blue Cross and Blue Shield plans offer a broad range of claims and benefit management services in conjunction with or independently of their insurance functions. Businesses in some communities have formed coalitions to provide some of the same services.

In addition to conventional insurers and TPAs, there are approximately 60 staff model health maintenance organizations (HMOs), 75 group model HMOs, 80 network model HMOs, and 360 independent practice associations (IPAs) (GHAA, 1991; Marion Merrell Dow, Inc., 1992). Over 40 percent of HMOs are sponsored by Blue Cross and Blue Shield plans or commercial insurers, but these plans account for just under 30 percent of total HMO enrollments. In addition, specialized networks have been created to cover dental, podiatric, vision, mental health care, and other services.

Employers may purchase services from other organizations, which vary in scope from broad to narrow. They include utilization management organizations that review the necessity or appropriateness of health services; organizations that review the performance of utilization management organizations; case management firms that help manage services and costs for very expensive patients; accounting firms that audit claims and provide consulting and other services; firms that specialize in data analysis; and firms that specialize in health promotion and health risk appraisal.


An agent acts on behalf of an insurer to sell its products to individuals and groups. A broker, in theory, acts on behalf of an employer or other group in placing business with an insurer.

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