A report by consulting firm Accenture says one in four consumers who obtain benefits through their... [+]
As the uninsured prepare to sign up to public online marketplaces known as exchanges under the Affordable Care Act, a flood of employers are taking to a similar private sector approach, led by last week’s move by
A report last week by consulting giant
Aon Hewitt (AON), a large employee benefits consultancy, said last week that 17 employers will join Walgreens in 2014 turning to a new concept whereby employers are giving their workers money to buy health benefits via private online marketplaces known as exchanges.
Though the concept used by Walgreen and a growing number of employers is in the private sector, the exchange is akin to the state and federally-regulated marketplaces that in less than two weeks will offer uninsured individuals subsidized benefits under the Affordable Care Act.
“These public exchanges will expand and standardize coverage for an estimated 30 million individuals by 2017,” the consulting giant Accenture said in its report. “However, this transformation is also paving the way for the rapid growth of another quietly emerging channel. Private health insurance exchanges have been incubating for several years, but the accelerated development of exchange products and technologies has employers increasingly re-evaluating traditional employee benefits.”
This doesn’t mean these private employers like Walgreen are throwing their employees out of employer-based coverage, nor are they ending financial support of worker benefits. Rather, it allows more worker choice through an online selection process but could also allow employers to better control or even reduce the credit or subsidy they provide workers to buy via the exchanges.
Accenture’s report said 50 percent of consumers are “intrigued by the choice and flexibility the new platforms would offer.” Accenture is projecting private exchange enrollment will eventually surpass the government-run exchanges by 2018.
The private exchanges work like those that are expected to be operational by states or the federal government next month under the Affordable Care Act next year in that they offer consumers more choices plus people who buy coverage are empowered to make choices for their individual needs, benefits consultants say. Open enrollment for uninsured individuals under the health law begins Oct. 1 and runs through next March.
Under the health law signed into law by President Obama, millions of Americans in January of next year who have no coverage will receive federal subsidies of about $5,000 to help them buy coverage from health insurance companies that sell individual and small group policies. That subsidized coverage will be offered on exchanges as well but those marketplaces will be operated by each state or the federal government or a partnership between state insurance administrations and the U.S. Department of Health and Human Services depending on the state.
Thus, Walgreen and other employees are not headed to an open market like the uninsured under the health law who will sign up for coverage on government-run exchanges.
Aon Hewitt’s exchange works with each employer in the exchange deciding on the subsidy or “credit” that each worker will get to purchase coverage offered by the employer. Then, the employees take to the AON Hewitt exchange to select their coverage. The subsidy will vary from employer to employer.
“A private (health insurance) exchange is an online benefits marketplace that lets individuals shop for insurance products including health, dental, vision, life, auto and home,” Accenture said in its report. “Typically an employer will provide a “defined contribution” (e.g., $5,000 that works like a gift card) that can be used to purchase products that best meet individuals’ needs, offering greater choice and flexibility than traditionally available.”
Other consulting firms, too, are working with employers on private exchanges. Earlier this year, Mercer said that 10 insurance carriers, including
