When people are exposed to the actual cost of insurance, they have far different answers to some of the questions about what they are willing to trade between cost and service. Of course, health status has a major impact on their opinion. Other thoughts to consider include the tight labor market. In the case of small employers, the choice is often between defined contribution and no coverage at all. So if you make that change, you will be at a disadvantage in attracting the work force.
Most large employers are self-funded.
Again, this will cause more or a problem in the work force than you might think, because there will be plenty of employees who won't get what they want in an open insurance market. If they retain the risk, they have the identical problem of risk pooling, in that benefits money that goes into something other than health means less for health. In other words, if an employer retains the risk for health costs, they are going to have to pay more to make up for the money that the healthy employees put into something other than health. The approach that's been taken by large employers has been to have several choices available to employees, which is similar, but more constricted than an open market. This is what happened in Florida and Oregon, when insurers slowly dropped out of these purchasing coalitions.