Nearly half of employers considering private exchanges

Forty-five percent of employers have implemented or plan to consider using a private exchange for their full-time active employees before 2018, according to a new employer survey conducted by the Private Exchange Evaluation Collaborative (PEEC).

Thirty-seven percent of employers implemented a private exchange or are considering one for their pre-65 retirees, 32% for their post-65 retirees and 30% for their part-time employers, Amy Bergner, a managing director at PricewaterhouseCoopers said Tuesday at the Society for Human Resource Management’s Employment Law & Legislative Conference.

The PECC survey found that employers considering private exchanges found differing features or benefits of an exchange important, but most employers like the ability to have a variety of health care options, Bergner says.

More than 80% of employers also found important:

  • Flexible employee contributions
  • Tools that aid in plan selections
  • Cost of plan options
  • Implementation assistance
  • Experience and good track record
  • Financial stability
  • Ability to reduce benefit staff’s administrative effort
  • Data and reports
  • Level of transparency of fees

More than half of the employers surveyed said it’s very important to have a self-insured option, while 33% of employers indicated it’s important to have a fully-insured option, Bergner says.
Additionally, more than half of large employers said it was very important for a private exchange to offer flexibility within their contribution strategy, she adds.

Somewhat surprisingly, she says, only 45% of employers said it was very important to have a health and wellness program integrated in the exchange. The low interest in incorporated wellness programs is likely due to employers’ desire to self-administer a health and wellness program, Bergner says.

While employers are considering private exchanges, more than 80% of employers said barriers to adoption exist, including: immaturity of the private exchange market, stability of cost over time, stability or track record of exchange administrator, limited information about private exchanges and employee readiness.

Fifteen percent of employers surveyed by the PEEC are encouraging or will consider encouraging their full-time employees to obtain coverage in the public exchange before 2018.

Meanwhile, 58% of employers said they would consider doing so if employers are permitted to contribute toward coverage on the public exchanges in 2017 or 2018, an indication that public exchanges may be a pathway to private exchanges,” Bergner says.

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