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Kaiser Report on Private Insurance Exchanges

By October 1, 2014Commentary

The Kaiser Family Foundation has produced another outstanding report, this time on the private insurance exchange world being constructed for employment-based health care coverage.  (Kaiser Report)   Private insurance exchanges were conceived of as a way to facilitate an employee’s ability to match a health plan with their needs and preferences.  The exchanges may be single carrier, but more often are multi-insurer.  And they increasingly could be paired with a defined contribution strategy or a health savings account approach.  The major benefit consultants all offer a private exchange solution, which may facilitate rapid growth at least among larger employers.  Other key attributes of private exchanges include extensive use of decision support tools and offering of ancillary benefits, such disability insurance and dental or vision plans.  The authors interviewed most of the leading exchange companies and believe that at least 2.5 million people had coverage through a private exchange in 2014 and anticipate at least 100% growth for 2015.  Based on surveys of employer intentions, it appears that the exchanges could be covering 30 to 40 million people by 2018.

Some private exchanges solutions are offered by health insurers and these exchanges obviously typically are only using a set of health plans underwritten or administered by the carrier.  Aetna, Cigna and UnitedHealth Group all have an exchange functionality that they offer to employers.  Anthem and other Blue Cross plans purchased a majority interest in Bloom Health.  Other private exchanges are offered by independent vendors such as AonHewitt, TowersWatson, Mercer, bSwift and Liazon.  Based on its interviews, Kaiser finds that many employers are interested in the exchanges because they facilitate defined contribution approaches, which offer employers a clear method of controlling spending growth from year to year.  Large employers may shift back to an insured plan from their current common use of self-funding.  The exchanges also allow employers to continue to encourage more worker involvement in their health and health care.  For consumers, the private exchanges may offer more choice, but also can place more cost and decision-making burdens on their shoulders.  The report has detailed profiles of most of the major exchange vendors.  Private exchanges, defined contribution and high-deductible plans all seem likely to grow in an increasingly intertwined way over the next few years.

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