Yet more evidence is emerging to support the theory that corporate America will move some or most of its employees to private health care exchanges to both control costs and offload administrative duties associated with health coverage.
Research by PriceWaterhouse Coopers found that 32 percent of corporate decision makers queried about their intentions with respect to private exchanges said they would use the exchanges to provide employee coverage within three years.
But it won’t be a hard charge to move workers to the private exchanges, Pwc predicted.
“While the [Patient Protection and Affordable Care Act]’s public marketplaces are expected to see rapid early growth, the shift to retail-style private exchanges may be more of a steady trickle,” PwC said.
PwC cited previously identified obstacles to a rapid adoption of the private exchange solution: lack of long-term data indicating the exchanges will be a sustainable solution; employee concerns about the shift; and the weighing of economic benefits vs. loss of detailed health data on employees.
Company size will be a factor: PwC said those with 50 or fewer employees may be better served directing workers to the public exchanges than tangling with the details of private exchanges. But larger companies will almost have to consider the private exchanges as an option as they seek to better control both costs of health coverage and employee health.
“Exchanges will be most attractive to employers looking to shift health care decision-making to their employees,” states PwC. While very small firms will likely opt for public exchange coverage, many small and mid-sized companies may come to view the private exchanges as a place to purchase more affordable insurance for employees than they could have found before the act went into effect.
“On the whole, I think private exchanges are going to be the best in the middle tier — those companies typically don’t have a lot of bargaining power in the market,” PwC quoted Ezekiel Emanuel, a professor of medical ethics and health policy at the University of Pennsylvania, from an interview with Health Research Institute, a unit of PwC.
Advantages for these companies include a predictable budget line item for health coverage as well as a way to get out from under some of the administrative costs involved with providing coverage to the workforce.
“However, companies with the most sophisticated benefits programs may not see as much value in a private exchange — at least in their current form,” PwC opined.
That’s because larger corporations have more options for cost-control when it comes to offering health coverage. They can move employees to high-deductible plans — and still have oversight of the plan, including offering incentives for workers to engage in wellness plans. Offering coverage can be a powerful recruiting tool — especially if it is missing as part of the recruitment package.
“Private exchanges may also open self-insured employers to the risk of relying on a third party to control health care costs,” PwC said. Brian Marcotte of the National Business Group on Health told PwC that, while there’s considerable employer interest in private exchanges, “most are waiting to see how they evolve to manage health care costs.”
For now, C-Suite decision makers will continue to watch for signs that private exchanges can help them control costs without losing control of employee health trends. Private exchanges are fast maturing, but the jury, especially for large corporations, is still out on the extent of the role they will play.
“As the retail insurance market continues to expand, two essential factors will ultimately determine success: whether employers see sustainable cost savings and whether exchanges truly enhance the customer experience. Exchanges that can deliver on both may stand the best chance in this rapidly evolving market,” PwC concluded.
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