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Reasons to be skeptical about the value of private exchanges

Concept may actually shift more costs onto employees

Though private health insurance exchanges have risen in popularity in recent years, not everyone is convinced that they are the consumer-friendly benefits solution they're cracked up to be.

Such is the view of Scott Wood, principal of Arizona-based firm Benefit Commerce Group, explains Jeff Smedsrud in a contributed post for Forbes. Though his view is not a popular one, Wood argues that private exchanges are simply a way to shift more costs onto workers by repackaging insurance products already offered to employer groups.

What's more, the post says, private exchanges allow health insurers to spend less on population health management and wellness strategies they often offer to employer groups. For example, gym membership discounts are not as commonplace for private-exchange plans, nor are low-cost telemedicine benefits. The problem with dropping these features is that they serve to engage consumers and track employees' health, the post argues, which helps lower overall healthcare costs.

Finally, the post notes that private exchanges require more effort on the part of human resources teams and employees, as they must familiarize themselves with what can be a confusing array of choices and work with several customer services representatives as opposed to a dedicated contact.

In a recent interview, however, Ashok Subramanian, co-founder and CEO of private exchange company Liazon, told FierceHealthPayer that private exchanges provide employees with more transparency and ownership over the value of their healthcare dollars than in a traditional benefits program. And employers are increasingly taking note, as enrollment in private exchanges reached 6 million in 2015 and could reach 40 million by 2018.

Others, though, argue that private exchanges simply could use a few adjustments. Employers could keep insurers from shifting costly patients onto other plans by choosing only one insurer, Forbes contributor John C. Goodman previously wrote.

To learn more:
- read the post

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