The Rise of Private Health Exchanges: Implications for Consumers, Employers and Insurers

Posted December 2011

In an effort to control costs and offer workers more health plan options that can better suit their needs, an increasing number of employers are turning to private health insurance exchanges. Unlike traditional employer-sponsored health coverage, under exchanges employers give their workers a defined amount of money and allow them to shop for coverage, often from multiple insurers in the exchange. For employers, the amount a company pays towards coverage is capped; for workers, greater choice exists and the exchange helps promote competition among insurers.

In September 2011, private exchanges became front-page health insurance news when WellPoint and two large Blue Cross and Blue Shield plan operators acquired a majority interest in Bloom Health, which has developed a private exchange platform it offers to employers. The insurers plan to use the platform to launch a nationwide private insurance exchange. Next year, Aon Hewittt, a national consulting firm, will begin enrollment in its exchange, which will use a multicarrier platform and target large employers.

NCSL Meeting Presentation at Fall Forum - December 1, 2011

Health Reform Options: Private Health Exchanges

What role might private health exchanges play in the new world of state health exchanges?  This session will review some of the early thinking about how private health exchanges work in the new and evolving health care system in America.

Speaker:  Christopher Condeluci, J.D., Of Counsel, Venable LLP, Washington, D.C. [Slide Presentation for NCSL] - no audio

Other experts and practictioners on private exchanges are

• Abir Sen from Bloom Health,
• Ken Sperling from Aon Hewitt and
• Bryce Williams from Extend Health, which has been operating the nation’s largest private Medicare exchange for five years,

In November, these experts detailed their work on private exchanges and how it is expected to change the health benefits marketplace. They outline their plans for expanding private exchanges and project how the exchanges are likely to impact insurers, employers and enrollees. This includes perspectives on key questions such as:

• What are the pros and cons for health insurers of establishing or participating in private exchanges?
• Why are private exchanges expected to help employers provide health benefits while driving costs down and offering greater choice to their workforces?
• What market conditions provide the most fertile environment for private exchanges to succeed?
• How will exchanges help employees take more control over their health spend?
• How will private exchanges handle the transition of employees from group to individual plans?
• How are private exchanges expected to fare in the face of state-run insurance exchanges in 2014?