The prominence of private exchanges has grown with the changes in health care law in the United States. Exchanges are full of potential within the market — which means their uses will only change and likely increase in the future.
“When it comes to private exchanges, employers across the nation are just getting their feet wet; it’s a big step to go from paper to electronic enrollment,” Frank B. Mengert writes for Employee Benefit Adviser. “What is liable to happen is that as businesses see their needs grow, they will demand more out of the technology.”
One area they’re already successful: helping employers control costs for things like retirees’ health benefits, writes Jerry Geisel for Business Insurance. Geisel used Chicago-based LafargeHolcim U.S. as an example. It moved the retirees it had previously been covering to a private exchange and credited Health Reimbursement Arrangements on their behalf. Plus it offered retirees more options — 20-plus, in some cases — rather than the two options they had before the change. Meanwhile, LafargeHolcim controlled its costs and freed up HR staff time to work on other priorities.
This success story just scratches the surface of the possibilities for exchanges. “A growing portion of small and midsize firms are reaping the benefits of more nimble technology platforms that simplify shopping for coverage, administering plans, containing costs and achieving better outcomes,” writes Bruce Shutan for Employee Benefit Adviser. “However, lobbyists and small-business owners alike are frustrated by what they see as regulatory limits and market inefficiencies.” These include the IRS differentiating how small and large employers can use private exchanges, Shutan writes. “The culprit: barring stand-alone HRAs for active employee populations,” he writes.
However, employer exchange use will likely grow and change. In the future, exchange technology could offer multi-plan selection and flexible funding capabilities by perhaps building in what Mengert calls “guide rails” for employees. “Depending on the desired outcome, different strategies can be used to influence the selection,” he writes, to consider contributions by tier or by age, or even lump-sum contributions.
So, as issues are resolved, watch for more employers using exchanges to solve many different challenges. “Not all private exchanges are created equal,” Mengert writes. “And in terms of employer adoption, we are just witnessing the tip of the iceberg.”