The entrance of private exchanges into the employer-sponsored insurance landscape is timely in many ways. Despite the recent slowing in health expenditures and premium increases, employers and employees still feel considerable pain in these areas. The following five points explain why private exchanges can be a solution and why now. (Click any of the images below to enlarge.)
1. Employers are Still In
With the passage of the ACA, health policy experts predicted that employer-sponsored insurance (ESI) coverage would decline as more affordable non-ESI options became available. In spite of this, the proportion of workers covered by ESI has held steady since 2013. 1,2
2. But Employers Still Feel Pain
Although premium increases have moderated in recent years, annual increases rose at a rate three times greater than inflation and wage growth from 2010-2015.3
3. Employees Have More Skin in the Game
From 2005 to 2015, the share of worker contribution toward insurance premiums (83%) increased at a greater rate than employer contributions (54%).3
4. Cadillac Tax is Looming
As yet, the Cadillac tax is still set to affect employers offering high cost plans in 2018. The tax will affect one out of every four employers in its first year. 4
5. Private Exchanges Can Help
Private exchanges have a collection of savings mechanisms. These include administrative savings, supporting more consumer-driven health plans, and implementing narrow and tiered networks. When pulled together, these levers have a more powerful impact on the cost curve.
1. Urban Institute, 2015. Health Reform Monitoring Survey. [cited 2015 Nov 19].
2. Emanuel E, 2014. Reinventing American Health Care: How the Affordable Care Act will Improve our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System. 1 edition. New York: PublicAffairs; 2014. 400.
3. Kaiser Family Foundation, 2015. 2015 Employer Health Benefits Survey. [cited 2015 Nov 19].
4. Kaiser Family Foundation, 2015. How Many Employers Could be Affected by the Cadillac Plan Tax?. [cited 2015 Nov 19].