Rising costs of health benefits and increased regulatory demands are causing many employers to turn to private insurance exchanges to provide health insurance coverage to their employees.
Here are five things to know about the rise of employer-based exchanges.
1. Through employer-based insurance exchanges, various health plans from a number of insurers are offered to employees. Businesses wanting to use employer-based exchanges hire companies with expertise in the health benefits business to operate their exchanges. Some of the leading private exchange operators include Aon Hewitt, Mercer and Towers Watson.
2. The exchanges allow employees to comparison shop for coverage from participating payers based on their individual medical needs, the contribution from their employer and their individual budget.
3. Many employers, such as Sears and Walgreens, already use this type of exchange. Walgreens has said it decided to switch to an employer-based exchange for its 160,000 employees to provide a better health insurance shopping experience for its employees, provide additional health insurance choices and relieve its staff of administrative duties. Walgreens used Aon Hewitt for its exchange.
4. Thirty-two percent of employers are considering moving their employees to a private exchange in the next three years, according to a recent report by PwC.
5. A report from Accenture found enrollment on private health insurance exchanges could outpace enrollment on public exchanges over the next five years, with 40 million Americans purchasing health insurance from a private exchange by 2018.
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