A survey of 700 benefits professionals show private insurance exchanges are becoming the plan of choice for employers who see the potential for decreased costs and a way out of the 2018 Cadillac Tax.
Thirty percent of those who took the survey say they are interested in moving to private exchanges. The majority of those interested, 62 percent, say they are likely to make the move in the next one-to-two years, according to Deloitte's 2015 Survey of U.S. Employers.
The online marketplaces allow employers to shift to a defined contribution for healthcare. Of those surveyed, 38 percent agreed they could control their healthcare costs through a private exchange.
Employers are positive about the potential for private exchanges to decrease costs, simplify their role in benefit administration, and provide their employees with comparable, higher-quality coverage at a lower cost.
Those who have already implemented private exchanges are even more positive than those who have not moved to private exchanges.
Eleven percent of the 700 people who took the survey have already implemented private exchanges. Of those, only 8 percent say they are not satisfied with the plan; only one in five say it has not reduced costs.
The Deloitte Center for Health Solutions conducted the online survey of 700 employers between February and March 2015. Respondents were randomly selected from an online panel and were chosen to complete the survey if they were responsible for making health benefits program decisions for their company and worked for a U.S. company with 50 or more employees.
The Deloitte survey found that private exchanges help employers shape their health benefit strategies in the face of coverage changes, rising costs, and pressure to recruit and retain talent.
The "outlook is good" Deloitte said.
In 2014, about 2.5 million individuals at companies of all sizes enrolled in health insurance plans through private exchanges.
That number is anticipated to increase as employers look to manage their current and future healthcare costs while also preparing for the Cadillac tax.
The Affordable Care Act's "Cadillac tax" begins in 2018 and is a non-deductible excise tax on high-cost, employer-sponsored plans. These are plans starting at $10,200 for individual coverage and $27,500 for group coverage. Employers will be responsible for calculating the tax per employee and apportioning it among their insurers and plan administrators.
Health insurance companies and other firms in the private exchange business should be aware of employers' willingness to change, Deloitte said.
Private exchanges are a vehicle for employers to move away from a defined benefit model, where employers provide a fixed set of health benefits to workers, to a defined contribution model, where employers offer employees a fixed amount of money to purchase health plans.
Employers using a private exchange give employees their allotted money and direct them to an exchange where they can shop for a health plan and other benefits such as dental insurance, based on options that the employer has preselected.
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The exchange can offer a variety of plans with different premiums, co-pays, deductibles, and coverage options. Insurance exchange platforms tend to have consumer support tools, such as physician finders.
Forty-percent of employers surveyed who have not adopted a private insurance exchange would prefer a carrier-sponsored exchange.
One-third of employers expressed a preference for multi-carrier competition in a private exchange. Nearly two-thirds of employers see a role for narrow networks or may be open to such a role.
Employers rank fee levels and perceived value as high concerns when they consider adopting an exchange. Fewer employers say they are concerned about lack of flexibility and control.