Whether participating in private exchanges or not, some say similar programs have been in place for decades, pointing to the government’s 50-year-old Federal Employee Health Benefit Plan as early example of what many employers are dealing with today.

“Private exchanges do not equate to the loss of employer-based plans,” said Paul Fronstin, director, health research & education program with the Employee Benefit Research Institute. And while uptake of private exchanges is expected to remain slow, but steady, he points to the looming Cadillac Tax as a possible catalyst for a future spike in employer participation with private exchanges.

Also see: Employers’ bottom lines hurt by compliance penalties in 2014

Speaking Thursday at EBRI’s 76th Policy Forum, Ted Nelson, Hilton’s global vice president- benefits, noted the hotel giant’s move to Aon Hewitt’s private exchange came after some “fresh thinking” following the rollout of the Affordable Care Act.

Coping with rising health care costs was not just about cutting back, he says. “People enrolled in our benefits are generally happier, more engaged, have lower turnover and provide better customer service,” he noted in explaining why the employer didn’t want to rush into deciding on a private exchange.

Debunking some of the myths, he noted the second year spikes of up to 25% in costs were really in fact a little more than 5% for Hilton.

In addition, the notion of a lack of employee satisfaction due to too many complications didn’t occur.

Also see: Employers committed to health benefits, despite cost fears

More than 80% of Hilton employees like the ability to choose, he said, noting 76% also said Aon’s site made it easy to make their decisions.

“The scores didn’t go down, and the noise didn’t go up,” he added.

A few recommendations he gives for a successful move to a private exchange include:

  • Look five to 10 years into the future;
  • Evaluate the exchange for everyone, including retirees, part-time employees and lower salaried employees;
  • Evaluate health plans pricing regionally versus nationally.

Analysis paralysis

But, he added, don’t, underestimate employees; they can handle the choices required in exchange programs. “I would have said three years ago that health care is not like buying snack food, but from our experiences, our employees really like having the choices, they didn’t not find [the experience] difficult and they are satisfied with the model.”

Technology is going to help be a driver to easing the choice barriers for employers and employees, added Christopher Calvert, senior vice president at Sibson Consulting.

Many of the Web sites and even the call centers will be able to help narrow down the choices from 20 plans to three, he added, sometimes in as little as a few questions. 

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