While many in the benefits industry think private exchanges and consumer-driven health care are the future, an employer expert questioned whether there should be a rush on the trend. Speaking Monday at the Workplace Benefits Renaissance in Atlantic City, N.J., John Sarno of the Employers Association of New Jersey called the faith that employers are putting in their employees with these marketplaces just a theory.
He expanded: The private exchange is based on a theory that the employee is an independent actor with adequate information and who is empowered to be an intelligent consumer. And so the private exchange theory is a bunch of huge groups who self-insure and hire an administrator to do the claims and manage the network and then they give the employees money to go on to the exchange and manage their care.
Sarno, who is president and general counsel of the Livingston N.J.-based group, said since the employer-sponsored health care system has worked in the exact opposite way for so many years, it may take more time for the market to adjust to private exchanges. Weve had multiple generations of employees getting health care this way, he said after describing the process where an employer typically goes out and finds a plan, prices it and gives it to their employees with no questions asked.
Now, is anyone prepared to shop for health care? he asked. Were talking about a disruptive strategy, to require the platform to have an empowered, educated consumer its almost a generational goal.
Sarno reminded the audience of brokers and advisers gathered at the event by EBAs parent company SourceMedia that ERISA actually refers to the traditional employer-sponsored health care system as a type of welfare, emphasizing how dependent employees have been on plan sponsors for coverage decisions.
Last week, an Aon-sponsored survey found that while only 5% of employers are currently signed on to private exchanges, nearly one-third are considering a move in the coming years. A spokesman for Aon suggested that health care cost management is a key factor in employers considering such marketplaces.
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