Year-Two Enrollment Results Show Private Health Exchanges Can Mitigate Costs and Create Greater Individual Accountability
According to the 2014 Aon Hewitt Health Care Survey,* 95% of employers plan to continue providing health care benefits to active employees in the next three to five years. While this wide-spread commitment to offering benefits is not new, the way employers are delivering these benefits is starting to transform. In fact, many organizations are moving away from the traditional “managed trend” approach and are instead opting for strategies that give employees more choice and hold them more accountable for their health care decisions.
For example, 40% of employers expect to migrate to a “house money/house rules” approach where they will continue to actively manage risk, but also require employees to be more engaged with their health – with an emphasis on improved outcomes – or face higher personal health care expenses.
Another 33% of employers plan to offer group-based health benefits to active employees through a private health exchange. This is a 17% increase from last year’s 28%, meaning there is quantifiable and increasing interest in exchanges.
At its core, the goal of the Aon Active Health Exchange is to combine consumerism and competition to create a new dynamic in health care that aligns risks and incentives among all players: employers, employees, carriers and providers. While a private health exchange strategy is not a good fit for every organization, results from the first two annual enrollment periods of the Aon Active Health Exchange suggest that for many organizations, a private exchange is an effective and sustainable option.
In 2014, more than 600,000 employees and their family members are enrolled through the Aon Active Health Exchange, up from 150,000 in 2013.
Here are some key observations from year two:
- The Aon private health exchange model is showing early signs of mitigating costs.
- Average premiums for the employers that participated in the Aon Active Health Exchange for the second year show signs that the exchange model is starting to bring down the rate of increase in overall health care costs, with the long-term goal of making health care cost increases look like general inflation. The average cost increase in fully insured premiums for companies returning to the Aon Active Health Exchange was 5.1%, whereas the average cost increase for other large U.S. employers was estimated to be 6-8%. This not only allows employers to reduce the cost burden on employees, but Aon’s insured model also allows employers to better budget their health care costs.
- The overall distribution of plans was broad and price mattered.
- In 2014, 31% of enrollees chose a Bronze plan, 42% chose a Silver plan, 17% chose a Gold plan and 10% chose a Platinum plan.
- Price was a primary, but not exclusive, factor for this decision; 32% of enrollees stated that price was the primary reason they chose their specific coverage level.
- Cost and quality were important for choosing the carrier, too. Thirty-six percent of enrollees said they selected their carrier because it was the lowest cost at their selected level and 25% said they chose their carrier because of a positive past experience. Twenty-two percent said they chose their carrier based on the network of doctors and hospitals.
- Consumerism and competition became key factors for people renewing their health benefits through the Aon Active Health Exchange.
- Nineteen percent of employees who renewed their health benefits through the exchange switched plan levels and 15% of enrollees switched insurance companies. Of the enrollees who changed carriers, 27% said the new carrier’s premium was the best deal.
- Overall, the fact that so many consumers stayed with the same level and/or carrier suggests that they were satisfied with the coverage they received in 2013 and didn’t feel the need to switch despite it being easy to do. However, the fact that some consumers did make a change will help drive competition over time, especially as consumers become more accustomed to being able to make easy changes year over year.
- Support tools are important and help enrollees become knowledgeable consumers, especially in the private health exchange environment.
- Aon Hewitt’s online decision support tools were highly utilized. In fact, enrollees in the Aon Active Health Exchange used such tools much more than employees who went through “traditional” enrollment. For example, 86% of the health exchange enrollees used a design features comparison tool compared to just 50% of “traditional” enrollees.
- With more transparency, enrollees are becoming informed health care consumers.
- Seventy-five percent said they have a good understanding of how they share the cost of group medical coverage with their employer.
- Most importantly, enrollees like the health exchange process.
- Despite some employer concern that employees will not embrace the private health exchange model, 87% of enrollees said they liked being able to choose among multiple carriers and 75% felt confident they chose the health plan that offered the best value for them and their family.
All of this is to say that, based on Aon Hewitt’s two years of enrollment experience with the Aon Active Health Exchange, the private health exchange model is delivering on its promise – to help lower health care costs while creating savvier health care consumers.
*The full results will be available in the coming months.
To learn more about how Aon Hewitt can help you decide if a private exchange is right for your organization, please contact us.
Ken Sperling is Aon Hewitt’s national health exchange strategy leader.