Dive Brief:
- Private healthcare exchanges, an emerging tool allowing employees to choose health benefits through an online portal, are gaining traction among employers because they slow healthcare costs, according to Forbes.
- Bruce Jaspen, who covers healthcare and related policies, notes that benefits analysts say employees faced with buying decisions tend to make smarter choices when prices are involved -- a prime money saver for employers.
- With private exchanges, employees can more easily be "guided" to medical providers with the best costs and outcomes.
Dive Insight:
“Employers are adopting private exchanges to gain more control of costs while empowering consumers with more choice,” Rich Birhanzel, managing director for Accenture Health administration services, told Forbes “Employers expect that private exchanges will mitigate premium cost and deliver more predictable and rational healthcare consumption as employees gain more control in tailoring their benefits.”
Jaspen reports that Accenture projects that 22 million people will be purchasing health insurance on private exchanges by 2017. Mercer, the employee benefits consultancy, says 27% of large employers in its healthcare benefits annual survey are “considering switching to an exchange within five years.”
Not to be confused with exhanges offered via federal and state governments, private exchanges allow employers to offer subsidies (they vary) and employees then shop for healthcare much like they shop for consumer goods on Amazon. Jaspen reports that clients in the second year on the Mercer’s private exchange experienced medical cost inflation of 1.5% (near the general rate of inflation), compared with medical care costs for employers rising about 5% or more annually.
“Employers just don’t want to offer workers just one plan,” Beth Umland, Mercer’s director of research for health and benefits, told Jaspen. “They want a range of plans. Providing choice is not going away and the private exchange is the modern vehicle that uses information technology to its fullest.”