One alternative that is emerging as an alternative to traditional employer health care cost and plan management is the corporate or private health exchange. The approach can be viable for employers unable to achieve needed levels of performance under their traditional self-managed plans or that have simply determined they no longer wish to invest the time, money and resources needed for traditional plan management.
Private exchanges have been available for Medicare retirees for nearly a decade and are proven to be an attractive alternative to the traditional employer-sponsored retiree plan. In fact, for Medicare retirees, the private exchange has become the vehicle of choice for large employers seeking an alternative for delivering health benefits. These arrangements offer concierge-style support to retirees for selecting from among a variety of Medicare supplement and Advantage plans and typically offer equal or better coverage at lower costs.
For pre-Medicare retirees, options now exist as part of private exchange solutions and also on the public exchanges (especially where the employer provides access only or low subsidy).
The availability of private exchanges for full-time active employees is a more recent development, but it’s an option of considerable interest to employers. Numerous arrangements exist, ranging from limited, single-carrier approaches to multicarrier, multiplan offerings that offer a satisfying consumer experience. A private exchange solution for active employers could be appealing to employers that:
- Seek a solution that can deliver greater value than their current self-managed approach
- Desire to offer more choice via a multiplan/multicarrier arrangement
- Wish to outsource plan management, vendor management and administration to deploy its time, money and resources differently
- Seek a springboard to effect change in their health care employee value proposition or experience
In a recent Towers Watson survey, 37% of the employers who responded anticipate that private exchange for active employers will be a viable alternative for employers by 2018.
Randall K. Abbott is a North American leader and senior strategist in Towers Watson's Health and Group Benefits practice.
(In the interest of full disclosure, Towers Watson provides an offering for employers, OneExchange, with private exchange solutions for active, full-time employees, pre-65 retirees and Medicare-eligible retirees.)