Newspaper article St Louis Post-Dispatch (MO)

Employee Health Coverage Moves to Private Exchanges

Newspaper article St Louis Post-Dispatch (MO)

Employee Health Coverage Moves to Private Exchanges

Article excerpt

If you work for a pretty big company, there's a reasonable chance that sooner or later you'll be choosing your health coverage and other benefits through a private exchange.

It's a growing trend in employee health insurance, and it has good and bad aspects for workers.

The good: You might get more choices than under the present system run through the company HR department, and the exchange might be able to hold down costs.

The bad: The exchanges are part of a shift away from the idea that companies will pay a certain percentage of health insurance costs. Instead, more companies want to give workers a fixed dollar amount for benefits, and anything above that is on the employee.

The company controls its costs, but more of the risk of rising health spending shifts to the workers.

First, let's clear up some confusion. These private exchanges for employee health coverage have nothing to do with the public exchanges being set up under Obamacare. The Obamacare exchanges are for individuals buying insurance on their own.

Now let's add some new confusion. There are also private exchanges selling individual insurance (see accompanying side story). But they're not what this column is about.

Big national benefits companies are setting up the employee benefit exchanges. They are rounding up employers to participate. Basically, the exchange sponsor takes over the task of negotiating deals with big health insurance companies, something HR used to do.

In theory, the exchanges should be able to bargain better deals, because they'll be offering lots of business from multiple employers using the exchange.

"It's the same concept as buying paper towels at Sam's Club," says Mary Jo Condon, of the St. Louis Area Business Health Coalition. Buy in bulk and you get better prices.

Aon Hewitt, for instance, says it has 18 insurers bidding for the 600,000 people on its exchange, although the 18 won't offer coverage in all cities. Aon Hewitt hasn't released figures on costs yet, so we don't know if the concept is working.

The system ought to mean more options for employees.

"We're expanding choice dramatically. Most employers would have had only one or two plans previously," said Abigail Neary, Midwest corporate exchange leader at Aon Hewitt.

The exchanges offer health insurance, dental and vision coverage, pre-tax funds for extra medical expenses and day care, disability coverage and other options. The Mercer Marketplace exchange, which will open in January, offers auto, home and pet insurance, too.

Employees sign up for coverage by going to the private exchange's website. The exchanges also have customer service reps and computer software to help employees make choices. Employers decide what options will be available to their employees. If the boss doesn't like pets, they'll be no insurance for Rover. …

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