As the private exchange hype continues in the media and benefits industry, a couple of employers remain skeptical about the option for current employees.
Two Fortune 500 employers gathered Wednesday for a panel at the Americas Health Insurance Plans annual policy conference in Washington to deliver an up-to-date perspective on private exchanges. Highroads, which sponsored the lunch-time discussion, said their research shows a slightly different story than other polls conducted about private exchanges. Kim Buckey, a principal at the benefits technology firm, said 79% of employers in their polling said they arent looking to move to a private exchange option at all in 2014 and 50% had not begun evaluating them for their benefit packages at all.
We have investigated [private exchanges] for the Medicare side of the house because we think theres some potential there, but it also has some hurdles, said panelist Scott Kovaloski, manager of health and welfare benefits consulting at Alcoa Inc., an aluminum producer with 26,000 active U.S. employees and about 45,000 retirees eligible for health care. On the active side, I dont think the active [employee private] exchanges have all the kinks worked out especially on the financial side. I saw a stat that one of the exchanges provides 1.5% savings [thats] not compelling for me. He said he doesnt have a clear savings number in mind that would sway him in favor of private exchanges, but its definitely higher than 1.5%.
The other employer present, Pitney Bowes, has 4,000 of its retiree population in a private exchange, but has not put its 10,000 active employees on an exchange at this point. Mary Bradley, director of health care planning for the mailing and communications provider, said the exchange was a win for the retiree population because those marketplaces had been open for several years and the proven navigation and advice given to their retirees helps with the bandwidth problem in their benefits department. Her concerns with the active employee private exchanges, however, are many.
We have a big concern about our active employees thinking we just dumped them on an exchange, she said. In general, our employees also dont like to shop. Im confused about the added value of an exchange for an active population. I think its modeled well for the first year, but not for the next few years.
Highroads anecdotal research of clients in February also shows that 67% of employers surveyed think private exchanges have a place in the future, but are only one option. This thinking mirrors the perspective John Sarno of the Employers Association of New Jersey last week at the Workplace Benefits Renaissance conference, who also questioned whether employers are ready for a quick leap to the tools and asked if they were more of a generational goal for the benefits businesss.
Thomas Barker, a partner and co-chair of the health care practice at Foley Hoag LLP, was also at the AHIP panel and said even the retiree plans will be slow to take off and active employee private exchanges will be even slower.
Another concern is productivity, Pitney Bowes Bradley said. Theres nothing worse than having a person select a high-deductible plan, then not be able to cover their medical bills and theyre out on paid disability.
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