About 44 percent of employers believe they will provide employee health benefits through a corporate exchange in the next three to five years, according to a new study.

Aon Hewitt released the “2011 Employer Corporate Exchange Survey” on the eve of the Health Care Reform Act’s two year anniversary, which is March 23, 2010.

The Center for Democracy and Technology’s (CDT) Deven McGraw tells Insurance Networking News, “Employers are trying to create a group purchasing option where the corporate exchange would be able to negotiate lower rates from insurers by bringing a group of employers to the table. They are negotiating as a group of employers rather than just one employer, which gives them power in numbers.”

Of the 562 employers surveyed nationwide, 72 percent are very or somewhat interested in exploring if a corporate exchange model can be an effective long-term solution for managing the cost of an employee health plan.

“On the insurance side, this is potentially a great way to access a population that tends to be healthier,” says McGraw who is CDT’s health privacy project director in Washington, D.C.

Corporate or private exchanges solicit group-specific insured rates while the employer determines the contribution for employees to use in purchasing coverage. The employee then picks a coverage level and insurance network based on health needs, employer contribution, provider network participation and risk tolerance. “Corporate exchanges are getting a head start and from a consumer point of view, it’s a good thing if more people get access to health care,” says McGraw.

The ability to reduce costs was among the most important features for employers when considering a corporate exchange at 86 percen,t compared to improving access to quality health plans at 45 percent and increasing health care choices at 43 percent.

“The win-win is if pooling employers together in a private exchange results in the same level of care at the same cost while maximizing savings and keeping costs at a minimum,” says McGraw.
Although insurers are not required to participate in public exchanges, the expectation is that small business insurers will do so in 2014 and larger employers subsequently in 2017.

“If the employer market finds private exchanges to be more effective at getting employee health coverage at a lower cost, that could result in a skimming of more healthy enrollees that might otherwise have been part of the public exchange,” concludes McGraw. “But it's also possible that the larger public exchanges will still offer sufficient business opportunities for insurers so that it won't matter if some of the large employers seek coverage through private exchanges in lieu of coming into the public exchanges in 2017. It's too early to tell.”

This story originally appeared in Insurance Networking News, a SourceMedia publication.

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