Three representatives from private health insurance exchanges, speaking Thursday as part of a Midwest Business Group on Health education program, asserted that exchanges are hitting the ground running, and the model is well-equipped to help employers meet the health needs employees.
“We went live [Jan. 1] with three employers … representing approximately 100,000 employees and 200,000 lives,” Abigail Neary, senior vice president at Aon Hewitt, said during the MBGH forum dedicated to private exchanges. Employees, she says, are choosing their health coverage much as they’ve always done: “based on whether their doctor is in-network, if their prescriptions are covered, have they had a good experience.”
The current health care system, Neary said, is a Bermuda Triangle into which far too much money and effort gets lost. Between the three points of that triangle (employers, employees and providers), there are holes a private exchange can help fill.
“Today, if you look at this triangle, there’s a disproportionate share of the risk, the volatility and the sustainability of health care being put on the employers and employees,” Neary said. “So we set out to actually design a model that would reduce trend.”
John Vlajkovic, of the Bloom Health Private Exchange, said his organization “was built for one thing and one thing only: it was designed to assist employers who are moving to a defined-contribution strategy in a way that doesn’t negatively impact the workforce.”
Vlajkovic said Bloom currently has more than 150 companies on its platform, and key part of its strategy has been trying to shift the way human resources and benefits managers think about health care administration. The existing model isn’t meeting the need, he said.
“Employers have finite resources. They are making an investment in an employee and they are [currently] making the decision for the employee, saying, ‘Here’s how much money is going into your health care benefit.’ The employee has no say in that process,” Vlajkovic said. “So, what happens if you create a structure where people have greater choice and flexibility and control? Some people are going to recognize a benefit need and buy up their coverage; others are going to say, ‘Nope. I’m a 20-something, I have options on the end of the spectrum I’ve never had before. I’m going to take advantage of those and bring more take-home pay with me.’”
He continued: “That’s become a personal consumer decision, not an employer decision. When we look at our book of business, a full two-thirds actually do buy down their coverage. Another 11% will buy up their coverage. That leaves about 23% that stay in or around a plan that’s similar to what they have today. The way I look at that … what we’ve designed today in the defined benefit space meets the needs of about a quarter of the population.”
But Sherri Bockhorst, a principal at Buck Consultants Health Insurance Exchange, warns against letting private exchanges become an overwhelming flood of decisions. Workers can find satisfaction in the new system, she says, if it strikes the same, precise blend of simple and accommodating.
“We believe that the health of your business depends on the health of your employees, and we didn’t feel that just putting a DC amount in and shifting your employees to some other time of product … and giving them a lot of choice, wasn’t necessarily the best thing for employees,” Bockhorst said. “We have employees who don’t understand the difference between ‘co-pay’ and ‘co-insurance,’ so offering five different plans from six different carriers, we don’t think actually helps meet the needs of employees.”
Read more from the MGBH session,“Health Insurance Exchanges and CO-Ops: Public and Private Options,” in EBN inBrief this week.
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