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Employers take wait-and-see approach to private health care exchanges

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Employers take wait-and-see approach to private health care exchanges

While employers' interest in private health insurance exchanges as an alternative health benefits delivery solution remains high, few companies appear willing to be counted among the early adopters, a survey shows.

Only 6% of the 446 employers polled by the Private Exchange Evaluation Collaborative offer health care benefits for active employees through a private insurance exchange, but 41% say they will consider doing so before 2018, according to the results of PEEC's second annual employer survey.

Launched in October 2013, the PEEC is a joint market research effort between New York-based PricewaterhouseCoopers L.L.P., Employers' Health Coalition Inc., the Midwest Business Group on Health, the Northeast Business Group on Health and the Pacific Business Group on Health.

Private exchanges also saw limited adoption in 2014 as a method of providing health care benefits for retired employees. According to the survey results, 14% of employers polled currently use a private insurance exchange to offer health care benefits to their post-65 retirees, and another 23% are considering doing so.

“Employers have taken a step back to assess the early implementation results and are seeking greater transparency in administrative and consulting or broker fees to assure that employers and employees get better value,” Emma Hoo, director of the Pacific Business Group on Health, said Monday in a statement.

Between 95% and 98% of employers polled listed the cost of plan design options, administrative fee levels and disclosure of exchange fees and revenue sources among their highest priorities in evaluating competing exchange solutions.

Additionally, more than 80% of employers expressed a desire to retain control of the design of the health plans they offer to employees, as well as the selection of the third-party vendors and consultants servicing their accounts.

“Many (employers) are not yet ready to relinquish control of key stewardship roles such as funding, carrier, plan design, provider network choice and even their benefits consultant,” Ms. Hoo said in the statement.

The PEEC's report indicated that many employers are likely to hold off making a decision regarding a transition to a private exchange until financial results among early adopters reveal a sustainable reduction in health care costs.

Among the 6% of employers that provide health care benefits to their employees through a private exchange, 64% said they saw a net reduction in costs, while 24% said it was too soon to know how the shift in strategy will affect their benefits budget in the long term. The remaining 12% said their cost trends were unchanged after switching to a private exchange.

“A number of the private exchanges have begun to share the results of early adopters for their enrolled active employee populations, and the survey underscores the importance employers place on the experience and track record of an exchange,” Larry Boress, president and CEO of the Midwest Business Group on Health, said in the PEEC's statement.

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