Is it possible that the Cadillac Tax will be a major health spending cost ‘deflator’?
Private exchanges have been around for some time but they haven’t had the buzz that they do now with Health Care Reform. Although, they are now a regular part of benefit conversations and more exchanges are emerging, fairly few employers have moved to them so far. It is hard to determine how that will change over the next 3 years.
Exchanges can simplify administration and create an online shopping experience for employees. However, an important piece that is often not discussed in these articles is the premium load that is included in exchange plans where purchasing the same design plan direct from the carrier often costs less. So, at present, convenience is coming with price as well as a smaller number of plans for the employer to choose from.
Some private labels are posing as ‘exchanges’ when they are mostly an online benefit enrollment portal that just includes the multiple plans an employer has chosen to show from a particular carrier.
Defined contribution can be a great strategy with a private exchange. However, unless the employer assesses that defined contribution each year, as medical insurance premiums continue to increase, employees will take on the premium increase until they can no longer afford to participate.
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