The Link Jun. 2014 | Page 9

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