Employer Health Exchanges Akin To ObamaCare Approach See Lower Costs

Mar 6 2014, 12:00am CST | by

Employer Health Exchanges Akin To ObamaCare Approach See Lower Costs
Photo Credit: Forbes Business

Pioneering companies that turned to a new concept of giving their workers money to buy health benefits via private online marketplaces known as exchanges are seeing lower health care costs.

Aon Hewitt, the large employee benefits consultancy, which last year launched its Aon Hewitt Corporate Health Exchange, said the average cost increase in “fully insured” premiums from three companies was 5.1 percent. The three pioneers were Aon (AON), Sears Holdings (SHLD) and Darden Restaurants (DRI).

By comparison, average cost increases for large U.S. employers are projected to be between 6 and 7 percent in 2014, according to Aon Hewitt’s annual cost trend data report.  The lower trend in the exchanges is significant, benefits analysts say, because the rate increase in the exchanges also included reinsurance fees levied on group plans under the Affordable Care Act.

“One of the primary goals of our private exchanges is to bring down the rate of increase in overall health care cost to something that looks more like general inflation,” said Ken Sperling, Aon’s Hewitt’s national exchange leader.

More and more benefits firms like Aon Hewitt rival, Mercer, and insurance companies like Aetna (AET), Cigna (CI), Humana (HUM) UnitedHealth Group (UNH) are developing their own private exchanges.

The exchanges work like those that are operational by states or the federal government under the Affordable Care Act in that they offer consumers more choices plus people who buy coverage are empowered to make choices for their individual needs, benefits consultants say.

Under the health law, millions of Americans are eligible for federal subsidies of about $5,000 to help them buy coverage from health insurance companies that sell individual and small group policies. That subsidized coverage is offered on the government exchanges.

Under the private exchange approach, employers decide on a subsidy or credit that each worker will get to purchase coverage. Then, the employees take to the exchange to select their coverage. The subsidy will vary from employer to employer.

Aon Hewitt has said its exchange turns “selecting health benefits into a retail shopping experience” akin to Amazon.com (AMZN) or Orbitz (OWW).

The Aon Hewit Exchange has grown to include more than 600,000 employees and their family members.

Though it’s still early in the development of private exchanges, consultants are optimistic.

“Our private exchange allows companies to maintain this benefit without having to erode its value or increase what individuals have to pay for it, which has been the pattern for the last decade,” Sperling said. “The second-year premiums in our exchange show early but promising signs that this downward shift is indeed occurring as the exchange helps aligns the interest of employees, employers and insurance companies.”

Source: Forbes Business

 
 

Don't miss ...

 

<a href="/latest_stories/all/all/30" rel="author">Forbes</a>
Forbes is among the most trusted resources for the world's business and investment leaders, providing them the uncompromising commentary, concise analysis, relevant tools and real-time reporting they need to succeed at work, profit from investing and have fun with the rewards of winning.

 

blog comments powered by Disqus

Latest stories

WHO team to assess how Pakistan is tackling Ebola
Islamabad, Nov 25 (IANS) A World Health Organization (WHO) mission arrived in Pakistan to assess arrangements made by the government to keep Ebola virus out of the country, a media report said Tuesday.
 
 
'Good fat' could help manage diabetes
Melbourne, Nov 25 (IANS) Brown fat, nicknamed the 'good fat' because it warms up the body in cold temperatures, burning up calories in the process, could also be used to manage Type 2 diabetes, finds research.
 
 
Sleep apnea leads to poor aerobic fitness
New York, Nov 25 (IANS) People with sleep apnea, in which breathing repeatedly starts and stops during slumber, are likely to have reduced aerobic fitness, even compared with those of similar body mass indices, new research shows.
 
 
Man with Ebola like symptoms dies in Pakistan
Islamabad, Nov 25 (IANS) A man who was hospitalised with Ebola like symptoms has died, a media report said Tuesday.
 
 
 

Latest from the Network

Two NATO soldiers die in Afghan attack
Kabul, Nov 25 (IANS) Two soldiers were killed in an attack in Afghanistan, said a statement Tuesday. "Two ISAF (International Security Assistance Force) service members died as a result of an attack in eastern...
Read more on Politics Balla
 
WHO team to assess how Pakistan is tackling Ebola
Islamabad, Nov 25 (IANS) A World Health Organization (WHO) mission arrived in Pakistan to assess arrangements made by the government to keep Ebola virus out of the country, a media report said Tuesday. During its week...
Read more on Business Balla
 
French striker Giroud to miss remaining European matches
London, Nov 25 (IANS) Olivier Giroud will miss both of Arsenal's remaining UEFA Champions League group matches after the club kept him out of the squad, acting on medical reports that suggested he would be unavailable...
Read more on Sport Balla
 
Werder Bremen looking for fresh faces
Berlin, Nov. Nov 25 (IANS) German club Werder Bremen will be looking to strengthen their squad in January, the team's director of football Rouven Schroder has disclosed. A 0-2 defeat in the north Germany derby to...
Read more on Sport Balla
 
Pele readmitted to hospital
Rio de Janeiro, Nov 25 (IANS) Brazilian football legend Pele has been admitted to a hospital for the second time in less than two weeks. The 74-year-old was taken to Sao Paulo's Albert Einstein Hospital Monday...
Read more on Sport Balla
 
Jury decision in Ferguson shooting provokes protests in US
Washington, Nov 25 (IANS) Protests erupted across the US after a jury decided not to indict a Ferguson police officer in Michael Brown shooting death case. On Tuesday, protests were held in New York, Chicago and in...
Read more on Politics Balla
 
Benched Podoldki expresses his frustration
Berlin, Nov 25 (IANS) Arsenal's German forward Lukas Podolski has said he was frustrated by being kept on the Gunners' bench, heightening speculation that he may leave the club in January's transfer window, reports...
Read more on Sport Balla
 
Dan Aykroyd is selective about roles
Dan Aykroyd is very selective with the roles he accepts now. The 62-year-old star has become more picky when deciding what movies he acts in because he wants to spend more time with his wife, Donna Dixon, and three...
Read more on Movie Balla
 
'Good fat' could help manage diabetes
Melbourne, Nov 25 (IANS) Brown fat, nicknamed the 'good fat' because it warms up the body in cold temperatures, burning up calories in the process, could also be used to manage Type 2 diabetes, finds research. Brown...
Read more on Business Balla
 
Toys R’ US hoping for big Black Friday
Toys R’ US has been the leading retailer of kids toys in the United States for well over 60 years. Black Friday 2014 is right around the corner and Toys R’ US has issued their Black Friday ad fliers along with...
Read more on Black Friday Countdown