5 Reasons Private Companies Should Consider Private Healthcare Exchanges

Health insurance marketplaces, online competitive insurance-shopping venues which connect buyers and sellers, offer a collective variety of health insurance plans to both individuals and employers. Managed by the federal and state governments, these public exchanges include mandated essentials, but are subject to changing regulations, including recently added fees and taxes.

Private exchanges, on the other hand, while still under the authority of governmental guidelines, allow private companies to offer employees a unique one-stop competitive alternative to the public marketplace and to traditional employer-offered insurance benefit plans. These online health insurance meccas remain different and separate from the government’s public system, and employers are rallying to switch to them for many reasons—the primary reason being that they save the employer a significant amount in costs.

A recent BloombergBusinessWeek survey found that “one-third of U.S. employers plan to move their workers’ health-care coverage to a private exchange in the next few years” as a way to reduce costs. Employers are following the lead of large retailers like Walgreens and Sears, which have already switched to private exchanges to accommodate full-time, part-time, hourly and salaried employees.

Here are 5 reasons why all private companies should consider private exchanges.

1. Cost shifting. Private exchanges allow employers to dabble in cost-shifting, taking the increasing expense of medical coverage from the employer’s shoulders and shifting it to the employee. Payment for insurance benefits is replaced with a defined contribution, a fixed amount that can be capped by the employer, similar to that of a 401(k) contribution. This process works for employers because those who are familiar with using it already feel comfortable with the procedure, and the idea of simply not being involved in benefit management is extremely appealing.

2. Reduced cost. Employers are freed from the time-consuming and expensive administrative tasks often involved in sorting through plan options.

3. Flexibility for the company. Taking the defined contribution route means employers are not subjected to unnecessary government penalties if they don’t meet certain requirements resulting from changing guidelines.

4. Flexibility for the employee. Additionally, private exchanges allow a diverse population of employees to select their own Association Health Insurance plans based on personal needs, wants and budget. They’re not locked into a one-size-fits-all policy selected by the employer.

5. Detachment from the decision-making process. Private exchanges allow employers to remain neutral when it comes to the decision-making process, which could save countless hours of HR time. This also eliminates the responsibility of dealing with price increases. With private exchanges, the employer remains out of the picture when the plan announces a price increase. The employee can then either stay with the plan or begin searching for a new plan that suits his or her budget.

The Future Is Bright
While American healthcare goes through continuous changes working its way through initial kinks and glitches, private exchanges have seized the opportunity to successfully carve their niche into employers’ benefit programs. They offer easy-access online services with consumer- friendly advantages and a variety of support tools, like interactive communication, live chats and customer call centers.

As both public and private marketplaces gain momentum and consumers feel more comfortable browsing around within them, employers opting for private exchanges put themselves in a winning situation—both with their company’s finances and in the eyes of their employees.


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