A Contrarian’s View on Private Exchanges
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The Commonwealth Fun
June 6, 2013
An enormous amount of ink and energy have been devoted to private health exchanges, leading some to believe they will become the next big thing in health care as large employers flock to them in droves. Champions of private exchange aren’t hard to find—at least two large employers have already dumped their traditional plans and pushed employees into private exchanges. But will anyone else follow suit?
Robert Galvin, M.D., who led GE’s global health benefits office for 15 years and now helps dozens of companies manage their health care benefits as the CEO of Equity Healthcare, says: not right away.
Will Other Employers Follow Darden Restaurants and Sears into Private Exchanges?
Speculation about the market potential of private exchanges moved into high gear in late 2012, when Darden Restaurants and Sears both said that they would drop coverage as soon as they reasonably could and direct employees to shop for coverage through their own private health exchanges. Both firms have since moved forward with those pledges. At first glance, the benefits of a private exchange for providing employee coverage seem compelling—expanded choices for employees, a minimum of administrative hassle, and dramatically simplified budgeting, at least in the short term.
Speculation about the market potential of private exchanges moved into high gear in late 2012, when Darden Restaurants and Sears both said that they would drop coverage as soon as they reasonably could and direct employees to shop for coverage through their own private health exchanges. Both firms have since moved forward with those pledges. At first glance, the benefits of a private exchange for providing employee coverage seem compelling—expanded choices for employees, a minimum of administrative hassle, and dramatically simplified budgeting, at least in the short term.
Nevertheless, Galvin doesn’t see Sears and Darden as early movers in a more general shift. “They’re both low-wage employers with lots of part-time employees and fairly high turnover,” he said. “They’re essentially large versions of the small employers that exchanges were designed for, so it’s not that surprising that they’re interested. They’re not good bellwethers for the rest of the market.”
Are Private Exchanges the New 401k? Find out by reading the full article here.
