Assessing Private Health Insurance Exchanges Possibilities
The U.S. healthcare industry is witnessing a lot of activity on the private health insurance exchange front as increasing number of insurers are becoming interested in setting up their own health insurance exchanges to alleviate the risks that upcoming health insurance exchanges pose to insurers’ business hold in group markets.
A lot of health plans and even employee benefits consulting firms such as Aon Hewitt have designed their own corporate exchanges to tap into the rapidly growing market trend. The public health insurance exchanges are driving the insurance market towards the defined contribution plan models and private exchanges too are likely to benefit from offering defined contribution insurance plan models to employers.
Health plans and other organizations planning to set up their own private exchange platforms would need to strategize and incorporate innovative features that can ease out the health insurance management burdens for employers and other group insurance consumers.
Employers and other group insurance buyers are often wary of the administrative complexities largely associated with purchasing group insurance. Exchange administrators may benefit from simplifying and deconstructing the group insurance purchase process for employers and devise a structure that reduces employee health insurance management for employers.
The Affordable Care Act has included provisions for employees with low incomes to avail of federal subsidies through public exchanges. To prevent employers from shifting to public exchanges once they arrive in 2014, insurers can introduce capabilities where low-income workers can access public health exchanges through the private health exchange portals.
It is likely that employers offering defined benefit plans through a single payer face difficulties in shifting to a defined contribution health plan model and a new delivery model. Also, the new concept of using the internet as the medium to purchase insurance may be unfamiliar to most employers. Through the help of awareness campaigns and soliciting the help of brokers, private health exchange administrators can encourage employers to switch to exchanges for purchasing bulk insurance. Of course, private exchange admins would need to invest a lot in making the private exchange website simple enough to allow people with limited English proficiency to easily apply for a preferred health plan.
Small businesses have typically been at a disadvantage as compared to larger employers in terms of available health plan choices. But this may change as private health exchanges gain prominence in the healthcare markets. Purchasing health insurance through private health insurance exchanges will not only offer wide choices to employers and other groups in terms of health insurance vendors and health coverage but will also help in reducing administrative complexities for them.
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