A Business Group Reacts Strangely to the Rise of Private Health Exchanges

This blog has discussed the rise of private exchanges for health benefits, describing them as “getting ready for individual health insurance to be the standard.” A private exchange allows an employer to make a defined contribution to employees’ health benefits, which they can use to choose one of many policies within the exchange.

AON Hewitt has a thriving exchange practice, and it recently announced significant growth:

Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), today announced that it expects more than 1.2 million employees, retirees and their eligible dependents from more than 100 companies to choose individual and employer-sponsored health benefits through Aon’s suite of private health exchanges. This is up from more than 70 companies and over 750,000 employees, retirees and their eligible dependents.

Fellow Forbes contributor Bruce Japsen has more about the growth of private exchanges. The strangest news is the reaction of the National Business Coalition on Health* to its own survey of employers:

In a departure from other industry polls, employers said they plan to reject private exchanges as a way to control rising health care costs, according to a new survey of more than 330 employers…

In fact, the survey reports that 32 percent are considering moving to one within three to five years, up from 5 percent today. Describing growth of over 600 percent as a “plan to reject” is surely inaccurate.

Some business groups are having a hard time accepting this change, hoping to remain paternalistic in choosing health benefits for their employees. If employers want to continue playing an important role in health benefits, it would be better for them to embrace changes that increase workers’ choices.

*Correction: The original version of this entry named the National Business Group on Health as the sponsor of the survey. I apologize for the error.

Comments (2)

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  1. Don Levit says:

    AON expects participants to choose individual and employer-sponsored health benefits
    Does this mean the AON exchange offers individual and group policies
    If so how is AON able to split up the group between group and individual policyholders?
    Don Levit

    • John R. Graham says:

      A few years ago, I did not think private exchanges could happen, due to regulatory constraints. I have been proved wrong. I’d like to see them extended to small groups, and that is a research project which NCPA would like to execute.