Published on May 6, 2014

Many large employers wary of private health insurance exchanges

By Matt Dunning, Crain News Service

CHICAGO (May 6, 2014) — Large employers remain divided over whether private health insurance exchanges are a viable option for delivering health benefits to their active employees, according to a survey released last week.

Half of employers polled in a survey by Chicago-based Pacific Resources Benefits Advisors L.L.C. indicated that they were not planning to move their group healthcare benefits for active employees into a private exchange.

Slightly more than 11 percent of employers surveyed said they are interested in evaluating private exchanges as a benefits strategy, and 35 percent said they have begun that process. About 4 percent said they currently use a private exchange to provide healthcare benefits to their active employees.

Similarly, employers were divided in terms of their level of confidence in private exchanges’ viability as an alternative means of providing employee health benefits. Approximately 49 percent said they were either not confident or did not know if exchanges were a viable option for their group benefit plans, while 45 percent said they were only somewhat confident in private exchanges. Slightly less than 6 percent of employers said they were very confident in private exchanges’ viability.

“For large employers, it will be critical to determine at some point whether moving active employee health coverage to a private exchange is the right move for their organization and its plan participants,” Paul Rogers, president and chief operating officer of Pacific Resources Benefits Advisors, said in a statement released on May 2.

“This is a complex decision about a new benefits strategy that is still evolving, and the survey results tell us that, right now, most large employers are not ready to make that decision.”

The survey also revealed a difference of opinion among large employers regarding their preferred method of evaluating the various models of private exchanges available in the marketplace. About one quarter of employers said they would likely conduct their evaluation in-house, and another quarter said they would hire a consultant that did not offer an exchange of its own.

Thirteen percent of employers said they would hire a consultant to conduct their evaluation, even if that firm offered its own exchange, and roughly 4 percent said they would rely on their existing benefits broker to advise them on the exchange marketplace.

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This report appeared on businessinsurance.com, the website of Crain’s Business Insurance magazine, a Chicago-based sister publication of Tire Business.

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