DC Model for Health Benefits

New private health exchanges offer large companies cost control.

While state insurance exchanges are mandated by healthcare reform to be up and running by 2014, some private health insurance exchanges that target corporations are already doing business, suggesting that healthcare benefits may follow retirement benefits’ shift to a defined-contribution model.

Benefits consultancy Mercer launched a suite of health exchange products last week, joining competitor Aon Hewitt, which announced a health exchange for employers last year. Bloom Health, a Minneapolis-based company that operates an exchange, was acquired last year by three health insurers: WellPoint, Blue Cross Blue Shield of Michigan and Health Care Service Corp., which operates Blue Cross and Blue Shield plans in four states.

A recent Aon Hewitt survey showed 44% of companies say a private exchange will be the way they provide health benefits to employees in the next three to five years.

“The employer marketplace is shifting, with about half of companies wanting to stay in the delivery business, and the other half of employers wanting to move to more of a defined-contribution approach and take a step back from delivery of benefits and plan design,” says Ken Sperling, Aon Hewitt’s national health exchange strategy leader.

The third product from Mercer, Health Advantage targets companies with 3,000 or more employees that are self-insured and provides offerings from two insurers, Raetzman says, along with a care management program whose nurses will focus on helping those with multiple chronic conditions navigate the healthcare system. “The Health Advantage model derives its savings primarily from much better care management,” he says.

Healthcare reform requires every state to set up an insurance exchange by 2014 for small employers and individuals. Beginning in 2017, states are allowed to open their exchanges to larger employers.

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