More Insurance Plans Sold Through Private Exchange

Employers are moving more quickly than forecasted to offer health insurance to their workers through private exchanges, according to new data from Accenture, a consulting firm.

Three million people signed up for workplace health coverage for this year through private exchanges, Accenture said. That’s roughly three times the number of people the firm had estimated last fall would enroll for coverage through the private exchanges — online systems that are separate from the state and federal health insurance marketplaces.

The growth was driven largely by smaller and midsize companies — those with no more than 1,000 employees, said Rich Birhanzel, who leads Accenture’s health administration services. Beginning last fall, significant numbers of employers offered coverage through private exchanges for the first time, and the firm had predicted that about one million would enroll. “What we’re seeing is that adoption is happening faster than we anticipated,” he said.

Accenture estimates that total enrollment in private exchanges by active employees will reach about 40 million by 2018, surpassing the number of people enrolling through state and federally funded exchanges. (Currently, the federal government says eight million people have signed up for health insurance through the public exchanges set up by the Affordable Care Act).

Private exchanges are similar to the public marketplaces, but are offered by employers to their employees. Consulting companies, including Aon Hewitt, Mercer, Towers Watson and Buck Consultants, operate private exchanges, and some insurers also offer their own versions. Walgreen and Sears, for instance, participate in Aon Hewitt’s offering, known as the Corporate Health Exchange.

Some employers are shifting employees to the exchanges to control costs and reduce administrative burdens, and to give workers more plans to choose from. (The idea is that offering plans from multiple insurers will help lower costs through competition.) While details of the exchanges vary, companies typically allocate a specific amount for employees to spend on health insurance, and then workers choose from a menu of options.

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Jeffrey R. Ungvary

President

Jeffrey R. Ungvary