The mid-market’s secret weapon: medical stop-loss captives that scale smarter

Mike Van Ham (pictured), SVP, health risk management at Captive Resources, looks at how member-owned group captives are redefining cost control to drive employer results by implementing first-dollar strategies, integrated point solutions and shared innovation.

In the current healthcare landscape, mid-sized employers (50–500 lives) are caught in a pressure cooker of rising costs, opaque systems and limited strategic control.

Fully insured models have offered little reprieve. These arrangements are often black boxes, denying employers visibility into claims data and removing any chance to capture upside when the plan performs well. Year after year, premiums climb and employers are left playing defence.

However, a structural alternative among savvy mid-market employers is gaining momentum: medical stop-loss (MSL) group captives. These member-owned captives are changing the rules and giving organisations the tools to control cost, drive innovation and scale smarter.

From passenger to pilot: a new governance model for mid-sized employers

Historically, self-funding was considered too complex or risky for the mid-market. But that narrative has shifted. Captive participation is no longer just about pooled risk. It’s about owning the mechanism of control. In a group stop-loss captive, employers move from passive purchasers to active stakeholders, with access to data, flexibility in design and the shared strength of like-minded peers.

“Our focus isn't just on catastrophic claims – it’s on managing “the other 80%” through innovative plan design and solution strategies.”

Unlike traditional arrangements, captives provide employers with transparency, alignment and leverage. Members not only own a piece of the risk, they own the opportunity to innovate.

Over the past decade, self-insurance has become more than a funding strategy – it’s become a blueprint for employer-led innovation. Mid-market organisations' ability to shape their health benefits strategy at one point felt out of reach. Now it’s becoming a standard expectation.

Captive Resources is at the centre of this transformation, which empowers best-in-class companies to seize control of their insurance programmes, lower costs and develop healthier workforces. This is achieved through a platform of member-owned captives that helps employers stabilise volatility, test forward-leaning solutions and build the infrastructure needed to scale smarter.

First-dollar strategy: why cost containment starts with data and design

At Captive Resources, our philosophy is simple: strategic control begins at the first dollar. Through our health risk management (HRM) framework, captive members gain direct access to granular claims data, integrated dashboards and clear decision-making benchmarks.

Our open architecture allows members to select or swap their choice of third-party administrators (TPAs), pharmacy benefit managers (PBMs) and point solutions with minimal disruption. This flexibility is a core advantage – it empowers employers to use real-time insights to refine their benefit design to meet their unique needs.

Importantly, our focus isn't just on catastrophic claims – it’s on managing “the other 80%” through innovative plan design and solution strategies. With embedded analytics and predictive modeling, we help members uncover utilisation drivers, identify at-risk populations early and implement targeted interventions that reduce spending and improve health outcomes.

Performance measurement is embedded at every level of our HRM strategy. From developing new partnerships to underwriting discussions, we ensure decisions are informed by near-real-time data, transforming oversight into insight.

From connection to coordination: member communities driving strategy

One of the quiet engines behind every well-functioning group captive is its member community. Unlike traditional insurance arrangements, our model is member-owned and directed, so the strategy isn’t dictated from the top down. It’s built collaboratively and shared across like-minded peers.

Through interactive workshops, ad-hoc pilot groups, clinical steering committees and real-time data benchmarking, employers don’t just share ideas – they build on them. It’s not unusual to see one member bring a solution, another refine it, and a third who deploys it at scale within a single plan year.

These peer-to-peer engagements generate something powerful: momentum. Momentum turns pilots into programmes and conversations into coordinated action. Whether it’s a shared formulary design for GLP-1s or a multi-employer approach to digital medical clinics with embedded navigation, we’re seeing strategy move faster because it’s built by the people closest to the need.

Leading with purpose: innovation embedded in infrastructure

The explosion of point solutions in the health benefits industry has brought promise and complexity. For mid-sized employers, the challenge isn’t coming up with new ideas – it’s finding and proving what works.

That’s where the captive structure excels. In our member-led model, employers aren’t isolated while experimenting. They’re leveraging the captive's scale and coordination to pilot programmes rigorously, align incentives and collect meaningful outcome data.

We’ve helped develop a wide range of solutions:

• Virtual-first care models provide integrated access to primary and specialty care, supported by clinical navigation and continuity of care that enhances engagement and trust between patients and providers.
• Chronic condition programmes combine lifestyle coaching with clinical oversight to manage diabetes, obesity, and cardiometabolic risk, including strategies for appropriate GLP-1 utilisation.
• Pharmacy benefit solutions focus on formulary transparency, cost management and alignment with employer goals, offering clinical guidance to control high-cost drug categories.
• Musculoskeletal (MSK) solutions aimed at reducing unnecessary surgeries through early interventions, steering toward centres of excellence or leveraging virtual physical therapy, for example.

Critically, these aren’t standalone efforts. They’re integrated into broader benefit strategies, evaluated across defined metrics and adjusted based on performance. Small and mid-sized employers rarely have access to this kind of testing environment, which is why captives are becoming such valuable innovation platforms.

From stack to strategy: curated ecosystems for scaled impact

Too often, benefit programmes resemble a loosely connected set of vendors, rather than a coherent strategy. Employers are left with a “stack” of solutions, each with its own contract, ROI claim and reporting structure.

Captive Resources helps the captive programmes we advise move past that.

Through our strategic partnership solutions (SPS) programme, we’ve built a curated ecosystem that combines best-in-class vendor solutions, aligned implementation frameworks and data integration to support a more unified strategy.

Rather than simply offering a menu of vendors, SPS enables employers to select solutions that fit within a broader ecosystem, one designed to function holistically. For example:

• PBMs with biosimilar-first formularies, GLP-1 utilisation protocols and a lowest net cost approach
• TPAs with flexible administration and strong administrative services only (ASO) pricing.
• Virtual care models that go beyond traditional telemedicine and incorporate behavioural health and care navigation.

By coordinating these components through the captive, we’re helping employers go from fragmented procurement to strategic integration. That distinction is key because when solutions are selected intentionally and aligned structurally, the result isn’t just better cost control – it’s a better experience for members and administrators alike.

Unlocking scale without sacrificing agility

The group captive model also solves a fundamental challenge mid-market employers have always faced: a lack of leverage.

Historically, smaller employers couldn’t negotiate favourable terms or attract top-tier vendor partners. Today, through aggregated purchasing and coordinated negotiation, the captive programmes we advise can access enterprise-level solutions at sustainable rates.

But we don’t stop at price. Members within the captive programmes also retain flexibility. With an open-architecture design, they can switch vendors, adjust networks and implement pilots on their terms. It’s a balance of scale and control – a structure that maximises buying power without locking employers into rigid platforms.

This purchasing agility – combined with curated vendor vetting, ongoing analytics and governance support – has helped captive members pursue more innovative strategies at lower costs. As the market evolves, that flexibility will only become more critical.

Anticipating tomorrow: high-cost therapies and emerging risk

We’re also paying close attention to what’s coming next.

Gene therapies, precision medicine, transplants and other high-cost clinical interventions are no longer theoretical. They’re entering the mainstream, bringing a new layer of complexity and volatility.

This isn’t about panic. It’s about preparedness.

By embedding these conversations into underwriting discussions and governance committees, the captive programmes we advise ensure that when these high-impact therapies become relevant, they’ll be ready, not surprised. As the captive evolves, we’re committed to developing the tools and data strategies necessary to navigate this next chapter.

Measurement as a strategic imperative

Performance measurement isn’t just an operational requirement – it’s a strategic advantage.

Inside the captive, we embed outcome tracking into every layer of engagement: underwriting, vendor pilots, renewal management and clinical programme oversight. This gives the members we advise the visibility to make timely, informed decisions, not six months after a trend emerges, but in near real time.

Some indicators from the captives we advise:

• A majority of members receive single-digit stop-loss renewal increases, even in a rising cost environment where leveraged trend alone yields double-digit increases.
• Lasers (adjudicated deductibles for high-risk individuals) are proactively managed and used as a strategic tool or lever.
• Over time, members have seen premium returns via surplus distributions, reinforcing the long-term value of participating in a well-run structure and having ownership.

More than any single stat, the broader story is this: captives make it possible to connect decisions to data. And in a landscape where every benefit dollar counts, that level of insight isn’t just helpful – it’s essential.

Captives as strategy platforms, not just safety nets

At their best, group captives are much more than reinsurance vehicles. They’re governance frameworks, innovation labs and ecosystems of peer-driven progress.

They allow mid-market employers to own the trajectory of their benefit strategy, collaborate with like-minded peers, make evidence-based decisions and adapt quickly without sacrificing stability.

As we look to the future, the conversation won’t just be about price. It will be about value – and how employers of all sizes can access the tools, insights and governance needed to lead.

Mike Van Ham is SVP, health risk management, at Captive Resources. He can be contacted at: mvanham@captiveresources.com

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