In a narrow study of health care costs associated with a private exchange, employers who offered their workforces health insurance through Aon Hewitt's private exchange said they incurred an average health cost increase of 5.3 percent in 2014. That figure is nearly 2 percent lower than industry averages for large corporations.
Aon Hewitt said it reviewed the performances of 18 employers who shifted workers to its private exchange. The 5.3 percent cost increase in 2014 compares favorably to estimates released by the National Business Group on Health, which said large companies were reporting 2014 increases in the neighborhood of 7 percent.
Aon Hewitt's survey is the second to be released this month by a large health care consulting firm that offers coverage via a private exchange. Towers Watson pushed out a study last week indicating growing interest in such an insurance coverage model.
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The private exchange space is coming under close inspection as the enrollment period for employee coverage looms. A PwC study of employers' intentions with respect to private exchanges found plenty of interest but plenty of caution about shifting employees to a private exchange.
While the Aon Hewitt results are encouraging for purveyors of private exchange services, the National Business Group on Health's research indicates the average large employer is headed in the 5 percent direction anyway.
The NBGH survey said large employers see an average 6.5 percent increase in health benefits costs in 2015, down from the 7 percent reported for this year. By 2016, they believe that plan design changes and other measures will lower cost increases to about 5 percent.
Aon Hewitt said the cost increases represented the sort of returns their clients have experienced for three years.
"All of the 18 employers that participated in 2014 are returning to the Aon Active Health Exchange in 2015," it reported. "Companies participating in the Aon Active Health Exchange also reduced their overall health care cost for medical coverage by more than $750 per employee compared to their expected 2014 spending…. Average health care costs were $8,342 per employee, down from $9,098 per employee."
Aon Hewitt said a post-enrollment survey conducted on its behalf by a third party indicated that three-quarters of enrollees "felt confident they chose the health plan that offered the best value for them and their family, and 87 percent liked being able to choose among multiple carriers."
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
