Employers’ Confidence in Private Exchanges Growing

March 18, 2015

Recent data from a Towers Watson employer survey show that by 2018, the percentage of employers that have confidence in private exchanges as a viable alternative for active employees will grow to 37%. This is more than double the 17% that view them as a viable alternative by 2016.

The new data comes from the 2015 Emerging Trends in Health Care Survey, which surveyed 444 midsize to large U.S. employers representing 7.2 million employees.

Survey results also reveal that 26% of employers have extensively analyzed private exchanges, and 20% say they are more interested in adopting a private exchange today than they were a year ago. Companies that have completed extensive analysis of private exchanges are twice as likely to find private exchanges a viable alternative in 2016 than those that have not.

Participants further reported that interest in cost savings and administrative simplicity is driving their companies’ interest in private exchanges. As a result, more than half (53%) say they expect finance to play a role in any decision to adopt a private exchange model instead of traditional employer-managed health plans.

Broader trends also emerged from the survey results:

  • A majority of employers (84%) anticipate making changes to their full-time employee health benefit programs over the next three years, despite the fact that cost increases have remained at historically low levels
  • The main driver of changes to further lower cost increases is the ACA’s excise tax, which goes into effect in 2018. Two in five employers that have done extensive modeling of their plans say they will trigger the excise tax in 2018. Two-thirds say the tax will have an impact on their health program strategies

Other areas that employers will look at for cost reductions include spouse and dependent coverage, defined contribution arrangements, centers of excellence and high-performance networks, telemedicine, specialty pharma, and greater employee engagement in lifestyle and health behavior changes.

For more survey results in each of these areas, click here for the full release.

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