Some industry research has suggested that private exchanges will transform themselves into a clogged eight-lane freeway teeming with traffic within the next few years from a lonely country road less traveled today. But a recent published report argues that some of the nation’s top employers are now adopting a cautious approach.

While various large private exchanges recruited blue-chip clients ranging from Sears to Walgreens in 2013, no major U.S. corporations followed suit last year, nor are they expected to do the same in 2016. The forecast is based on Reuters interviews with nearly a dozen industry executives who believe the Fortune 500 isn’t convinced that there’s enough compelling evidence of benefit cost savings to warrant the switch from traditional health insurance delivery.

“We’ve seen a lot of interest by large employers and not a lot of movement,” said Brian Marcotte, president and CEO of the National Business Group on Health, in an interview with EBN. “Part of the reason for that is these models are still maturing and employers are taking a wait-and-see approach.”

While Starbucks Corp. considered moving its 136,000 employees into a private HIX, the gourmet coffee retail chain ultimately decided not to take any action. “Large companies that are open to joining the exchanges are now asking to see at least two or three years, and as many as five years, of data on insurance premiums and medical claims from plans sold on the exchanges to be sure that there will not be a sudden increase in premiums to contend with,” according to the Reuters account.

Just 3% of employers with 500 or more employees are using private exchanges, notes a 2014 report from Mercer, one of several leading HR and benefit consulting firms that offers its own private HIX solution. Mercer also found that 28% of survey respondents indicated that they’d make the shift within five years – hardly a significant move forward. Thus far, private exchanges have drawn employers covering as many as 3 million people since 2012.

And while large employers (those with 5,000 or more employees) surveyed by the NBGH for its Large Employers’ 2015 Health Plan Design Survey expressed confidence in the ability of private exchanges to outperform employer-sponsored health plans in terms of plan choice and complying with regulations, they were less confident in the ability of private exchanges to control costs or engage employees in better health care decision-making.

Another point Reuters mentioned is that Aon Hewitt recently noted that its private HIX, which targets only fully insured health plans, would actually lose money in 2014 following a more optimistic forecast that the venture would be “mildly profitable.” The admission follows a Forbes report that the consultant’s exchange is expected to grow by 60% to 1.2 million enrollees in 2015. Next year could be even bigger. That’s when Cigna is expected to sell health plans on Aon Hewitt’s exchange.

Patty Fontneau, who heads up Cigna’s private exchange business, told Reuters that the private HIX model is viable, “it’s just the pace at which we believe the market is going to make the transition” is slower than initially thought.

One interesting wrinkle is that size may not matter so much in terms of attracting huge customers. It was noted, for example, that Towers Watson’s Liazon unit and Mercer are growing their respective exchanges from midsize customers, while Avalere Health CEO Dan Mendelson opined that the private HIX model isn’t a good fit for large firms that already enjoy significant leverage on negotiating health benefit costs.

Some of the more bullish reports from two years ago now appear to be overly optimistic. Enrollment in private health insurance exchanges were said to likely match the public exchanges by 2017, when about 18% of Americans are expected to purchase their plans through the HIX model, according to Accenture research in 2013. Those findings also suggested that private exchanges would become the premier conduit for many of the 170 million people who receive benefits through their employer.  

Four months later, a leading private HIX technology provider found that as many as 93% of 144 industry insiders thought more employers will use the defined contribution funding model that drives private exchanges. The Array Health survey also noted that nearly 70% of the respondents believed it will happen by 2018.

Bruce Shutan is a Los Angeles-based freelance writer.

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