The rapid proliferation of private health insurance exchanges over the past 18 months has resulted in a diverse range of available structures, plan options and service packages for employers seeking greater control over their group health benefits costs.

More than 100 benefits service providers have launched private health insurance exchanges since the fall of 2012. In addition to national and regional benefits brokers, recent entrants into the private health insurance exchange market include third-party consultants, online insurance agencies and health care information technology vendors.

Even health insurers themselves are pursuing a foothold in the marketplace, with formidable companies such as UnitedHealth Group, Cigna Inc. and Aetna Inc. starting their own proprietary exchanges within the past year.

Though employer participation in private exchanges has been limited thus far, studies predict a substantial increase over the next few years in employer takeup of health benefits exchange delivery systems for both active and retired employees.

According to survey data released in February by Chicago-based benefits broker Aon Hewitt, about 5% of more than 1,200 U.S. employers polled already provide health insurance for active employees through a private exchange, and another 33% said private exchanges will become their preferred benefits delivery approach within the next three to five years.

A separate study conducted in November 2013 by the Private Exchange Evaluation Collaborative — a joint research effort launched last year between New York-based PricewaterhouseCoopers, the Employers Health Coalition, the Midwest Business Group on Health, the Northeast Business Group on Health and the Pacific Business Group on Health — found that while just 2% of more than 720 employers polled use private exchanges to provide health care coverage for full-time employees, 45% are considering moving their health benefits programs to an exchange by 2018.

Most of the private health insurance exchanges in operation are conceptually similar. Though some exchanges support multiple types of contribution strategies, the majority of providers have positioned their exchanges as a means for employers to implement a defined contribution approach to their benefits programs, in which active and/or retired employees are given a fixed annual allowance for health insurance and voluntary benefits.

In turn, employees use the fixed sum to select from a menu of coverage options offered either through multiple national and regional insurers or, in some cases, through a single insurer.

“What this model of exchange environment does is it levels the playing field, where the employer, the employee and the insurer are all sharing the risk,” said Tom Sondergeld, senior director of health care and wellness benefits at the Walgreen Co. The Deerfield, Ill.-based drugstore chain was one of 18 large employers to join Aon Hewitt's Corporate Health Exchange in September 2013.

“I think that kind of arrangement can do more to shift the curve more than simply forcing a consumer-driven model onto your employees,” Mr. Sondergeld said. “That's what attracted us toward this exchange model; it wasn't the cost of health care so much as it was trying to find a way to bring all the players into the game.”

While the influx of so many private exchange operators into a market previously occupied by just a handful of companies has drastically expanded the model's availability to employers, it also has made selecting an exchange with the appropriate blend of coverages and services all the more complex a task.

An examination of 20 different proprietary exchanges conducted in January by the exchange evaluation collaborative revealed considerable variations in their overall structure, transparency of costs, insurance coverage options, contribution and plan design flexibility, administrative support and plan member services.

“This is not a short-term decision-making process,” said Larry Boress, president and CEO of the Chicago-based Midwest Business Group on Health. “It could reasonably take an employer 12 to 18 months to pick out an exchange provider that's ultimately right for them.”

Employers considering moving their employee health benefits programs into a private exchange must first determine whether to offer coverage options through a single-insurer or a multi-insurer marketplace.

That decision will likely depend on the size and geographic distribution of an employer's benefits-eligible workforce, as well as its interest in retaining an independent group experience rating and some level of control over the design and administration of the benefits plans available to plan members.

Having identified the appropriate structural model, the next layer of an employer's evaluation of potential exchange operators should focus on the scope and quality of the medical and voluntary insurance coverages available within each operator's marketplace. Employers also must take into account variations in medical provider networks and care delivery options, including the availability of features such as accountable care organizations, best-in-area provider networks, telemedicine and patient-centered medical homes.

Employers also should weigh the extent of implementation and administrative assistance they will need from exchange providers, particularly when it comes to complicated and labor-intensive tasks such as the collection and migration of legacy benefits program data. Employees, meanwhile, will likely need some level of plan purchasing decision support, as well as continuous customer service channels, care provider directories and health management resources.

Equally crucial to an employer's successful transition to an exchange-based group benefits program will be a robust employee education and communication strategy, an element that is typically — though not always — included in the suite of administrative support services offered by exchange operators.

Finally, employers contemplating participation in a private insurance exchange should insist on full transparency of a potential operator's schedule of exchange product and service costs and commissions, including implementation and consulting fees, insurer-directed fees and technology leasing arrangements.

“Not all of that may be immediately transparent to employers,” Mr. Boress said. “In a lot of cases, it's not entirely clear which elements and services are included in the core cost of the exchange, and which ones are part of a buy-up arrangement.”