Tuesday, September 10, 2013 at 6:00 AM
In less than a month, one of the most talked about aspects of the federal Affordable Care Act will take effect: Individuals without health insurance will be able to buy it on the open market through a collection of statewide exchanges. Among the touted benefits for consumers is a guarantee of coverage despite any pre-existing conditions and affordable health insurance. Now, we're hearing about a new twist - in addition to these public exchanges some employers are planning to create PRIVATE exchanges. ideastream health reporter Sarah Jane Tribble talks with Morning Edition Host Rick Jackson to explain what that's all about.
RICK: So last week, you aired a story in which you talked to proponents and opponents of Ohio’s exchange market. But in your reporting for that story you spotted news that despite all of the politics at play around the public exchange, the private market has been quietly moving ahead with its own exchanges.
SARAH: Right. Remember the public exchanges are the ones for people who don’t currently have insurance or don’t have a good way of doing price comparisons. So, now some employers who already provide health insurance for their employees are deciding this might be a good model for them to use - a way for them to give workers more ability to shop for insurance and save the company some money.
The Wall Street Journal had a report on this last week and I’ve been doing some follow-up.
What struck me was this message from the companies: Regardless of what happens in Washington, some of Corporate America has already decided that the exchanges are the way to go.
This summer, the global consulting firm called Accenture released data that by 2018 - in just five years - one in four American workers will get their employer health insurance on a private exchange.
RICK: Who’s using private exchanges or about to and what’s driving them there?
SARAH: Well, to better understand that I called Rich Birhanzel, he’s the managing director of Accenture’s Health Administration Services.
Rich said there are about 170 million Americans today who are dependent upon their employers for health insurance.
Increasingly employers have found health care benefit costs eating into their bottom line and leaving less money for pay, bonuses and other benefits. So they negotiate harder with the insurance companies and are very open to new solutions.
Small businesses and retirement plans have been the first to show an interest in the exchange option but Rich said he expects the big companies to go there next.
And, really, there’s one key market fact driving this trend, according to Rich.
RICH: Beyond the reasons we mentioned earlier in terms of consumerism and the expectations of employees and particularly the affordability challenge of employers is simply that this is where the health plans and the benefit consultants are preparing to move the business.
RICK: So, how does it work and what makes private exchanges more attractive to employers?
SARAH: With a private exchange employers establish an in-house exchange or contract with a benefits company that has established an exchange. Either one would be like the public exchange and is essentially a website where employees can compare insurance plans and choose one that fits their needs and their budget. The employer gives them a bundle of cash and says go buy your own insurance from this list of companies and plans we’ve put on a website.
SARAH: I also talked to Cathy Tripp at the benefits consulting firm Towers Watson.
She’s in charge of building a private exchange that Towers Watson can offer to its own employees but also to other employers. The firm is actually going out and talking to insurance companies and telling them to create plans that meet the Bronze, Silver and Gold standards - just like the ones being offered on the public exchanges. Right now, Towers Watson has four health insurance companies that meet those standards. Those companies have been bundled together at a national level and are being offered as an exchange that employers can buy into.
For the employees - including those at Towers Watson in Cleveland who are sort of testing this exchange in the coming year - there will be very little difference in how their insurance has worked in the past. They will still pick from a selection of health plans - probably more than they did before - and they will still see a monthly premium come out of their paycheck. AND they will still have to meet deductibles and pay copays.
BUT the structure behind the insurance they are getting is revolutionary. Because the employer is saying - here’s a pot of money, you decide how to spend it but that’s all you get.
RICK: So, employers want to be less involved in choosing plans and make their contribution more like a 401-k type retirement plan. We’ll contribute X amount and you choose among these various investments where to put it.
SARAH: That seems to be the idea. Tripp says employers have what she calls “benefit fatigue.”
TRIPP: You know, think about all the compliance and regulation they have to embrace. There’s HIPPAA and ERISA and ADA and FMLA and now there’s ACA and keeping track and complying with all the regulations and try to manage to 7 percent trend and dealing with all the enrollment complexities…
SARAH: I’m going cut her off there as she’s going on about the challenges employers face. It’s become a more and more a common refrain: Employers saying that providing health care isn’t their job. An employer wants to build cars, or widgets or sell services. They are NOT in the business of negotiating, designing and managing health care for employees.
If this trend does play out as some are predicting, it means a lot of workers won’t be able to keep the insurance plan they currently have - or if they do, they will likely be paying more of the costs themselves.
RICK: Private health insurance exchanges come as a bit of a surprise. I believe you ran across one other bit of unexpected news regarding exchanges too. In just a few seconds - what’s this other surprise?
SARAH: I was trying to figure out just how critical enrollment in the PUBLIC exchanges really is. So, I called up Sara Collins, who led a study published last month by the D.C.-based Commonwealth Fund.
Her study looked at young Americans under the age of 25 and whether they signed up on their parent’s insurance after they left college. This wasn’t allowed before the Affordable Care Act but became pretty popular after the act passed.
And guess who has been taking advantage of this perk the most?
RICK: Young Democrats.
SARAH: You’d think! But actually that’s wrong. More young adults registered as Republicans signed up for the Act’s new benefit than Democrats.
RICK: Thanks for the update, Sarah
To read the Accenture research, click here.
“Politics at Play as Ohio’s Health Exchange Nears Enrollment Date,” Sept. 5, 2013, ideastream’s Sarah Jane Tribble
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