Employer interest in private exchanges growing
By Dan Cook
There's yet more evidence available that employers are embracing the concept of a privately run health insurance exchange network. They are still awaiting more proof that the exchanges will offer a long term and stable option for employer sponsored coverage for workers. But they are now ready to be convinced of the private exchange model's potential for easing them out of the health insurance business.
The latest data comes from a survey of more than 700 employers from all U.S. Regions and industries conducted by the Private Exchange Evaluation Collaborative. The survey demonstrated that employers — especially large ones — are not yet ready to divest themselves of the burden of providing coverage for employees, but will do so if the private exchanges meet certain benchmarks.
One of the tidbits somewhat buried in the study: 85 percent of large employers say they will continue to offer their employees health coverage in 2016. When asked the same question, 72 percent of smaller employers said they planned to do so in 2016. This year, among all companies, 89 percent offer employee health insurance.
But slightly less than half say they “have implemented or plan to consider utilizing a private exchange for their full-time active employees before 2018.”
In other words, these employers have already made a strategic commitment to including private exchange insurance in their future business plans. More than a third (37 percent) plan to direct their pre-65 retirees to a private exchange, 32 percent will send post-65ers there, and 30 percent will utilize a private exchange for part-timers. With another 38 percent reporting that they will send part-timers to public exchanges by 2018, these employers clearly see the exchanges as the alternative for part-time employees based on what the employers now know about exchanges.
In general, more employers are planning to consider a private exchange than are planning to consider a public exchange,” except for part-timers, the study's authors said. “If employers are allowed to provide subsidies towards coverage in the public exchange, a higher percentage would consider using the public exchanges for active employees.”
Other nuggets from the survey include:
- 13 percent of employers have already adopted or are very likely to adopt a defined contribution approach in the next two years.
- 39 percent are somewhat or very unlikely to adopt a defined contribution approach.
- 51 percent of employers say that it is “very important” for a private exchange to accept ERISA fiduciary responsibilities for the plans purchased on the exchange.
- 79 percent say that this acceptance is somewhat or very important
- 78 percent of employers strongly or somewhat agreed that difficulty in exiting/changing exchanges was a barrier to offering a private exchange to their active employees.
- 31 percent agree that public exchanges will be viable options within five years.
- 15 percent of employers are encouraging or will consider encouraging their full-time employees to obtain health care coverage in the public exchange before 2018.
- If employers are permitted to contribute toward employees’ coverage on the public exchanges in 2017 or 2018, 58 percent would consider doing so.