Healthcare Business News
 


Accenture puts private exchange enrollment at 3 million


By Paul Demko
Posted: June 12, 2014 - 12:45 pm ET
Tags:

Roughly 3 million individuals who obtain healthcare coverage through their employer enrolled through private exchanges for 2014 benefits, according to an analysis by consulting firm Accenture. That population is expected to swell to 40 million by 2018, or roughly a quarter of all individuals with employer-based coverage.

Accenture's enrollment estimate for private exchanges in 2014 is far above previous calculations. In March, Moody’s Investors Service estimated that fewer than 1 million active employees enrolled in coverage through a private exchange for 2014, although that calculation did not include spouses and other relatives included in plans. And a forecast released last year by Accenture predicted that the private exchange population for this year would be 1 million individuals.

Advertisement | View Media Kit

 

Private exchanges mimic their public counterparts. They offer employees a wider array of coverage choices, often from competing insurers, than in traditional job-based benefit plans. The hope is that such marketplaces will reduce overall costs by allowing workers to choose plans that more accurately reflect their healthcare needs. Some of the largest private exchanges are operated by benefit management companies such as Aon Hewitt, Towers Watson and Mercer. But many insurers have launched private exchange products as well.

According to Richard Birhanzel, managing director of Accenture Health Administration Services, the 3 million figure was derived from scrutinizing reports by publicly traded companies and insights gleaned from working directly with insurers. Birhanzel attributes the rapid growth in enrollment in part to proselytizing efforts on the part of private exchange operators. But he also believes that there is organic interest from companies, particularly small- to mid-sized employers.

The pharmacy chain Walgreen Co. is one of the few large employers to embrace the private exchange model. Birhanzel argues that the 250,000-employee company's shift to a marketplace run by Aon Hewitt will encourage other large employers to make the change. “We haven't seen anybody else that's over 100,000 move yet, but we expect that that will happen this fall,” he said.

Part of the allure for companies is that it allows them to shift from a defined benefit system to a defined contribution system. The change is similar to the transformation that's taken place with pensions in recent decades. It potentially allows companies to stabilize costs in an area that's been growing rapidly—premiums have gone up by 80% over the last decade, according to the Kaiser Family Foundation—but it also risks alienating employees if it merely shifts costs onto them.

“Moving from defined benefit to defined contribution is a big part of this story,” Birhanzel said. “At a minimum they get to predictability.”

The Accenture report also highlights risks that companies could face in adopting private exchanges. Most notably, they need to make sure employees have sufficient tools to make intelligent choices in the marketplace. Otherwise workers might end up with plans that don't meet their medical needs.

“It's fundamentally a different decision than most people face today,” Birhanzel said.

Follow Paul Demko on Twitter: @MHpdemko


What do you think?

Share your opinion. Send a letter to the Editor or Post a comment below.

Post a comment

Loading Comments Loading comments...

Search ModernHealthcare.com:


 

Switch to the new Modern Healthcare Daily News app

For the best experience of ModernHealthcare.com on your iPad, switch to the new Modern Healthcare app — it's optimized for your device but there is no need to download.