Private Health Exchanges imageAre private health exchanges the answer to health reform’s Affordable Care Act (ACA)?

The answer is a mixed bag response.

  • Private health exchanges predict huge enrollment
  • Some employers are not so keen on the concept

The final answer could help shape the future of U.S. health insurance.

What Are Private Health Exchanges?

If you are the average Joe, the health exchanges you heard about are probably the public exchanges.

  • Federal public exchange (think Healthcare.gov)
  • State public exchange (e.g., California’s Covered California or Idaho’s Your Health Idaho)

Private exchanges emerged primarily from the health insurance industry.

Private exchanges existed prior to the implementation of the ACA. However, most insurance carriers and broker/consulting firms incorporated private exchanges into their ACA strategy.

  • Single carrier private exchanges offer coverage through one insurance carrier
  • Multi-carrier provide plans through multiple insurance carriers
  • Exchanges offer a marketplace for individuals to shop for health insurance
  • Most private exchanges offer additional insurance coverage, like dental, vision, life, and disability coverage

Employers and Private Health Exchanges

Employers that sponsor health benefits are the target market for private exchanges.

A popular approach is combining private health exchanges with direct contribution strategy.

  • Employers contribute a fixed dollar amount for employees
  • Employees use that amount to purchase the plans they want from the private exchange

Sounds simple, right?

Different Perspectives

One survey reveals employers are not necessarily keen on the idea of private health exchanges.

The National Business Coalition on Health teamed with Benz Communications to conduct the 2014 Inside Benefits Communication survey.

An executive summary of the report shared a somewhat surprising finding.

More than half (55%) of survey respondents will “never” have employees purchase health insurance
through a private exchange.

Never? Pretty strong response.

The exchanges have a different perspective.

Size Matters

Large companies probably view private health exchanges differently from smaller companies.

  • Large companies have more resources and influence over the services offered
  • Smaller companies may be unable to afford the full complement of private exchange services

The hiccups in the implementation of the federal Small Business Health Options Program (SHOP) put a dent in small employer options.

Could private exchanges step in? That depends on what’s offered and how much it costs.

Wait and See

The future of private health exchanges remains to be seen.

  • Will private exchanges be a luxury geared toward large companies?
  • Will private exchanges be a viable option for smaller employers?

I wonder if employers responding “never” to offering private health exchanges will do a 360 on their stance.


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Notice of Disclaimer –Cathy Miller is not an attorney or health care provider and cannot provide legal or health care advice. The information provided is for your general background only, and is not intended to constitute legal or health care advice as to your specific circumstances. We recommend you review legislation with legal counsel and visit your physician for health care issues.

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