Private Health Care Exchanges Las VEgas 

By: Ann Carrns (NY Times) June 2014

Employers are moving more quickly than forecasted to offer health insurance to their workers through private exchanges, according to new data from Accenture, a consulting firm.

Three million people signed up for workplace health coverage for this year through private exchanges, Accenture said. That’s roughly three times the number of people the firm had estimated last fall would enroll for coverage through the private exchanges — online systems that are separate from the state and federal health insurance marketplaces.

The growth was driven largely by smaller and midsize companies — those with no more than 1,000 employees, said Rich Birhanzel, who leads Accenture’s health administration services. Beginning last fall, significant numbers of employers offered coverage through private exchanges for the first time, and the firm had predicted that about one million would enroll. “What we’re seeing is that adoption is happening faster than we anticipated,” he said.

Accenture estimates that total enrollment in private exchanges by active employees will reach about 40 million by 2018, surpassing the number of people enrolling through state and federally funded exchanges. (Currently, the federal government says eight million people have signed up for health insurance through the public exchanges set up by the Affordable Care Act).

Accenture released the findings at the annual conference of America’s Health Insurance Plans, an industry group. The number was gleaned from publicly available corporate filings, as well as insights Accenture gained through its role as a consultant to employers, health insurers and exchange operators, Mr. Birhanzel said.

Private exchanges are similar to the public marketplaces, but are offered by employers to their employees. Consulting companies, including Aon Hewitt, Mercer, Towers Watson and Buck Consultants, operate private exchanges, and some insurers also offer their own versions. Walgreen and Sears, for instance, participate in Aon Hewitt’s offering, known as the Corporate Health Exchange.

Some employers are shifting employees to the exchanges to control costs and reduce administrative burdens, and to give workers more plans to choose from. (The idea is that offering plans from multiple insurers will help lower costs through competition.) While details of the exchanges vary, companies typically allocate a specific amount for employees to spend on health insurance, and then workers choose from a menu of options.

Roughly a quarter of employees who signed up through the private exchanges ended up with less coverage than they had under employer plans, Mr. Birhanzel said. They might have chosen to lower their monthly premiums or chosen to trade off some health coverage for other types of coverage — like disability insurance or life insurance — offered through the exchanges.

Lowering health insurance premiums generally means higher deductibles — the amount you must pay for care before coverage begins. High-deductible plans typically come with lower monthly premiums, but employees are responsible for more out-of-pocket costs.

The shift toward higher out-of-pocket spending has implications for doctors and hospitals as well as for patients, Mr. Birhanzel noted, in that they will be faced with collecting a greater share of payments directly from patients, rather than from insurers. Accenture estimates that out-of-pocket collections from patients with employer-based coverage will increase by 7 percent by 2018.

Here are some additional questions about private exchanges:

Can I buy insurance on a private exchange if my employer doesn’t participate?

Private exchanges are simply a different way for employers to offer coverage to their workers. If your employer doesn’t work with an exchange, you can’t buy coverage there. (If you don’t have employer-based coverage, you can buy individual insurance on the federal or state exchanges.)

If I choose a high-deductible health plan, how can I be sure I can pay my out-of-pocket costs?

You should carefully consider your health needs before selecting a high-deductible plan. “For some people, they have appropriately traded off coverage because they are healthy,” Mr. Birhanzel said. But if you have significant health care needs, a lower deductible and higher premium may make more sense.

Often, high-deductible plans are offered in tandem with a tax-advantaged health savings account, to which the employer may or may not contribute. You can set aside funds in the account and use them to pay for costs not covered by your plan; if you don’t spend the money, it rolls over into the next year, and you can take the funds with you if you change jobs.

Will doctors and hospitals be more aggressive in collecting payments, now that patients are paying more costs out of pocket?

Hospitals and other providers may consider changes in the way they collect payments — perhaps charging patients for a portion of their care up front — since they will be seeking more payments directly from patients, rather than from insurers. “It’s really too early to tell,” Mr. Birhanzel said.


NY Times