Employers using Aon Hewitts multi-carrier fully-insured private health care exchange experienced average annual health care cost savings more than 4% lower than industry projections.
For the 2015 plan year, the average annual health cost increase for companies in the exchange was 2.6%, compared to the industry average of 6.5% to 8% in 2015, Aon Hewitt reports.
Ken Sperling, Aon Hewitts national health exchange strategy leader, says cost savings are driven by competition within the exchange. Since Aons exchange is a fully insured model promoting competition among its multiple participating carriers, it acts as a cost-reducing force, as it would in any retail market, Sperling says.
Whenever you have competition in the retail market, prices go down every time, he adds. We took that concept into employer sponsored [insurance] and it works.
All companies that participated during the 2014 plan year remained in the exchange for the 2015 plan year. Aons post-enrollment survey, conducted by an independent third party, found that 87% of employees liked being able to choose among multiple carriers and 79% said they had a good understanding of how they share the cost of group medical coverage with their employer.
These results met expectations, Sperling says. We knew the model could work, we knew people would be staying [in the exchange] and putting the market forces to work would have a positive impact, he explains. We are pleased with the validation that comes with the numbers.
Sperling says companies that move to an exchange took a leap of faith that their employees would not be confused by all the plan choices and would treat buying insurance like they treat any consumer decision, such as Amazon.com or Zappos. That happened. Employees engaged. They like having choice and made choices best for them, he says.We have had extremely positive feedback from participating employers.
The cost savings and satisfaction, Sperling says, provide an increasing body of evidence that the [private exchange] theory translates into practice. That will help accelerate adoption as the model moves beyond the early adoption stage into more of a mainstream strategy, he adds. Certainly [there is] evidence that that model works and is sustainable. That will increase the rate of adoption.
Of those reenrolling for the 2015 plan year, 20% switched health plan levels, with 12% electing leaner plan designs and 8% selecting richer coverage. The most selected option was a silver plan (44%), followed by bronze (32%), gold (16%) and platinum (8%). For 2015, voluntary participation in a health savings account more than doubled, with an average contribution of $2,100.
While most individuals migrated toward a plan that was close to what they had before, there were still a meaningful number who chose to buy richer plans for increased coverage or who bought down in terms of coverage to secure a lower premium, Sperling says.
Those employees surveyed after their purchase said price was the driving factor (34%), followed by desire to choose a plan that offers coverage similar to their current plan (20%) and coverage that offers the best level of medical benefits for them (18%.)
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