Private exchanges gaining popularity
By Amanda McGrory-Dixon
Private health insurance exchanges may be gaining in popularity.
According to research from Mercer, 56 percent of employers are considering moving to this model for active or retired employees, tripling in number over the last year.
That's good news for Mercer, which in January announced the launch of its Mercer Marketplace, a private benefits exchange designed to help employers and employees by offering them a one-stop-shop for their benefits from multiple insurance providers. Open enrollment will begin this fall with the first policies going into effect on Jan. 1, 2014.
“Private exchanges will help employers better manage their costs and reduce their administrative burden while ensuring that employees have easy access to the coverage they need,” said Eric Grossman, senior partner and exchange business leader in Mercer’s Health & Benefits business. “Because of these advantages, we expect many employers to introduce a private exchange for 2014 and beyond.”
With a private exchange, the model turns to a defined contribution benefits approach, allowing the employer to provide a set amount for employees to spend on benefits. This leads to more stable, predictable costs, Mercer asserts.
In April, Mercer announced that several additional major providers were joining its private exchange, boosting the number to about 20.
Mercer’s exchange will be available to employers with at least 100 employees. Options under the Mercer exchange include a wide array of core medical and voluntary benefits, constituting more than 20 lines of coverage.
Private exchanges work similarly to the public exchanges set up by the Patient Protection and Affordable Care Act in that consumers will be able to compare and choose their own health plan. For the most part, employers give workers a set amount of money to spend on health insurance and other ancillary benefits in a private exchange.
The hope is that exchanges will increase competition between health insurance plans, thus leading to better prices for consumers.
Originally published on BenefitsPro.com