As workers are increasingly asked to pay more from their own pockets for employer-sponsored health plans, there's a big shift happening in how businesses are planning to offer health insurance.
About 6 million Americans with workplace coverage in 2014 received their health insurance through privately run health insurance exchanges, where employees can select coverage from a number of health plans — double the number from the year before, according to a new report from Accenture.
These exchanges are different from what most workers have been used to for years, in which your employer plays a much larger role in picking your insurance options, perhaps giving you just one or two plans to choose from. By contrast, in the exchanges, the employer essentially outsources the work, and employees generally have a much greater choice of health insurance options.
By pooling more workers together, the plans can have lower insurance rates, according to a 2014 Kaiser Family Foundation review of these burgeoning marketplaces. The exchanges are also increasingly offering technology tools to make the process of selecting a health plan a little less daunting.
The exchanges work like the insurance marketplaces created under the Affordable Care Act, which provide a platform to shop and compare health plans. Unlike the Obamacare exchanges, however, the private-run exchanges don't provide publicly funded subsidies to purchase insurance. The private marketplaces, though, may offer other benefits, such as vision and life insurance.
Still, these private exchanges make up just a small slice of the employer-sponsored health insurance market, which covers an estimated 150 million Americans. But Accenture projects that up to 40 million Americans in just a few years will receive workplace health insurance this way as employers look to limit their health-care costs.
Employers on these marketplaces may pay a certain percentage of a worker's health care costs, as most do today. The exchanges also make it easier for employers to provide their workers with a set amount of money they can use to spend on coverage, leaving it up to employees to figure out how generous they want their coverage to be.
One concern with this approach is that employers' contributions won't keep up with the pace of health spending growth, though there's no evidence yet that this has been happening in the past couple of years, according to the Kaiser foundation. The research group warns, though, "it is a trend to watch for."
The growth in these private exchanges last year was fueled by mid-sized companies with 100 to 2,500 workers, according to the Accenture report. There have been a few larger companies in recent years that have moved to private exchanges, like Walgreens and Darden Restaurants, which own chains including Olive Garden and Longhorn Steakhouse. But corporate giants haven't really been migrating to these private marketplaces in a big way, as Reuters reported a few months ago.
That will change in the next few years, if Accenture's predictions are right. Obamacare's looming "Cadillac" tax on high-cost health insurance plans could drive more employers to contain their health costs if the tax isn't altered in a significant way before the levy takes effect in 2018.
The 2010 health-care law also created similar public exchanges just for small businesses, but most of those suffered from severe technical problems in the law's first enrollment period and have received scant interest so far. The public exchanges, known as SHOP, are available just to businesses with 50 or fewer full-time workers, but the marketplaces are set to expand next year to businesses with up to 100 employees.