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Policy & Regulation News

Are health insurance exchanges the way of the future?

By Elizabeth Snell

- Retail organizations faced with increasing healthcare costs and regulatory demands are increasingly looking toward health insurance marketplaces – also known as exchanges – when it comes to their employees’ coverage options, according to a recent report by PwC’s Health Research Institute (HRI).

Health exchanges are potentially a better option for employers that want their employees to take more responsibility for their own healthcare coverage, reported The Rise of Retail Health Coverage. This is because employers with fewer than 50 full-time employees will have the option of sending workers to the public exchanges without penalty. However, for some companies private exchanges could offer more affordable insurance than they could obtain on their own.

“Employers are expressing significant interest in private exchanges, but taking the time to evaluate the various exchange offerings,” Barbara Gniewek, Principal of PwC’s Human Resource Services practice, said in a statement. “We are watching very closely as the market continues to evolve. Exchanges that can deliver sustainable cost savings, and enhance the customer experience while reducing the administrative burden will be best positioned for success.”

Thirty-two percent of employers are considering moving their active employees to a private exchange in the next three years, according to PwC’s 2014 Touchtone Survey. That report gathered information from more than 1,200 employers in 35 different states.

Additionally, over 60 percent of employers have either implemented or are considering implementing high deductible health plans as the only option, while over 40 percent are interested in value-based designs.

“Amidst the new and often complex regulatory requirements of ACA and rising health care costs, employers remain committed to providing benefits, but at the same time are re-evaluating their benefit strategies as they try to optimize the impact of consumerism, wellness and overall engagement in an effort to finally bend the health care cost curve,” the report’s author’s explained in a summary.

Earlier this month, the Centers for Medicare & Medicaid Services (CMS) reported that the health share of the country’s gross domestic product (GDP) is expected to increase at a slower rate than it has historically although it will still continue to grow. Additionally, over the next decade CMS estimates an average increase of 5.7 percent annually with the health share of the GDP reaching 19.3 percent by 2023.

According to the CMS report, the recent recession is responsible for driving the annual growth rate of national health expenditures down. Even so, the effects on keeping that growth rate historically low are atypical and inconsistent with a more comprehensive look at the relationship between the economy as a whole and healthcare expenditures.

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