Aon Hewitt (AON) said its private exchange enrollment will grow by 60 percent to 1.2 million enrollees in 2015 as more companies give workers a credit to buy health coverage in an online marketplace.
Aon is one of the health benefits industry’s pioneers in the development of private exchanges along with benefits consultancy rivals like Mercer, a subsidiary of Marsh & McLennan Companies (MMC) and Towers Watson (TW).
Health insurance companies, too, such as Aetna (AET) and Cigna (CI) are also wooing employer clients to the private exchange approach.
“The strong growth and significant interest in our exchanges reinforce that private health exchanges create a more powerful and efficient market for health insurance and improve the way it is evaluated, purchased and used,” Cary Grace, chief executive of Aon Exchange Solutions said in a statement.
Aon, which launched its exchange two years ago, said more than 70 companies and more than 750,000 employees, retirees and dependents this year selected health benefits from its exchange.
Employees get a credit or subsidy, and are sent to buy a plan on a private market place akin to Amazon.com or Orbitz in their respective industries. The approach gives employees more choice which could help to control costs if they pick less expensive benefits.
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Neither Aon nor participating companies would disclose enrollment specific for each company nor the list of employer participants. It's also unclear whether the companies are increasing the size of the credit from this year to 2015 for employees.
But Aon and most industry figures show employers are bullish on the exchange approach to health benefits.
Across the country, an estimated 3 million Americans are getting insurance from their employers this way, which is triple the number of active employees that were buying from private exchanges a year ago, according to a widely-cited analysis earlier this year from Accenture. The consulting firm said 40 million Americans will be buying on private exchanges in 2018.
Private exchanges are similar to public exchanges under the Affordable Care Act, which offers government subsidies rather than an employer credit to buy coverage.
But not all employers are wild about the private exchange approach.
The National Business Coalition on Health this week is out with a survey the organization said “resoundingly” rejects private exchanges as a way to control rising health care costs.
Though the language in the coalition’s release was strong, its survey showed 5 percent of more than 330 employers already use a private exchange and “8 percent are considering such a move within the next three years.”
NBCH said 55 percent of respondents will “never” stop sponsoring health coverage in favor of giving employees money to buy through a private exchange.
But benefits consultants say private exchanges offer employer-sponsored coverage so companies won’t stop sponsoring coverage by moving to their model.
Stay tuned.
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