Final answer:
The statement is false; an employer self-funded health plan usually requires a significant level of financial assets due to the employer taking on the risk of health care costs. Such plans can still result in employees being underinsured, and various health care systems and legislation attempt to address these and other issues such as adverse selection.
Step-by-step explanation:
The statement that an employer self-funded health plan requires a low level of financial assets is false. Self-funded health plans are where employers pay for their employees' medical claims out of their own funds rather than purchasing a conventional health insurance policy. This can require a significant level of financial assets because the employer is assuming the risk for the costs of their employees' healthcare. Employers must be able to handle potential high-cost medical claims, which could be substantial. Additionally, employers may purchase stop-loss insurance to protect against unusually high claims, which also requires financial planning.
For employees under such plans, they may face the prospect of being underinsured if the employer's coverage does not adequately cover all healthcare costs. It is worth noting that in some fee-for-service health financing systems and health maintenance organizations (HMOs), the way providers are reimbursed can impact the care patients receive. In the broader context, issues like adverse selection and affordability of premiums play a significant role in the effectiveness and stability of any health insurance marketplace.
Health insurance is a critical component for many, yet according to data, there is a considerable number of Americans without coverage. Even legislation like the Patient Protection and Affordable Care Act, which includes an employer mandate for companies with more than 50 employees, has not wholly solved the issues inherent in the health insurance market, including the potential for an insurance death spiral.