Expert Insight
Public versus private
Understanding the difference between public
and private health care exchanges
E
ighty-three percent of U.S. health
consumers are unfamiliar with
private exchanges, according to
a survey by Accenture, while a
Kaiser Health survey found that almost half
of respondents don’t understand that public
exchanges are a provision of the Affordable
Care Act, resulting in slow enrollment.
“I haven’t seen a massive uptake on the
private exchanges yet,” says Mark Haegele,
regional vice president of sales at HealthLink.
“But I have started to see a few employers say,
‘I’m no longer offering insurance, and you
can go on the public exchange.’”
Here are some additional insights from
Haegele.
How do private exchanges
and public ones differ?
Public exchanges, mandated by the ACA,
allow certain unemployed individuals,
individuals with employer-sponsored plans
and some small companies to purchase
health insurance. The exchanges are
sponsored by the government, either state or
federal, and cover medical and prescription
drugs with four coverage levels. Individual
consumers and small employer groups pay
for coverage, with some eligible to receive
government subsidies.
Private exchanges are available to
employees of companies that decide
to participate. Right now, only a few
organizations are offering private exchanges.
The employer sponsors the coverage, but
a private exchange has a broad range of
coverage, from medical and prescription
drugs to dental, vision and voluntary
benefits. As with a traditional health plan, the
employer and employee usually each pay for
part of the coverage.
What’s the attraction of
private exchanges?
Private exchanges are a way for employers to
easily establish a defined contribution-type
health plan. They can say, ‘I spent $1 million
last year on health care for my employees.
I’m willing to spend $1 million plus 3
percent next year.’ Then, every person gets
an allocation and can choose within the
available plans.
Private exchanges create predictability.
You’re buying a more budget-friendly solution
that helps employers be one more step
removed from insurance, versus managing
your own health plan. It may end up being
a steppingstone to the public exchanges.
Once employees get used to exchange-type
health plans, some employers may decide
to stop health coverage altogether and have
employees go on the public exchange.
An exchange doesn’t inherently do
anything to control health care costs. You can
build in prevention measures to keep costs
down, but that’s like any health plan.
What else should employers
know about private
exchanges?
Private exchanges are structured as a single
carrier solution. For example, if Aon
Hewitt’s private exchange has three carrier
options, a 500-life employer can go to the
exchange and pick one. Then, health plan
members have a menu of plan offerings
under that single carrier.
Typically, employer-sponsored health
plans have two or three options. Under
the exchange model, you might have
10, as well as ancillary coverages. It puts
different carriers’ defined contribution plans
in a room together, making it easier for
employers to choose. :
To discuss exchange opportunities,
contact a HealthLink Sale Representative
at 1-800-235-0306.
The Link • 9