America's 'other' health-care revolution
While everyone focuses on 'Obamacare's' controversial public exchanges, big changes are coming to the place where most people get their coverage – at work. Here's how they might affect you.
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Since not all Medicare recipients needed the full range of supplemental benefits provided by their corporate plans after retirement, it made sense for companies to provide a suite of individual care options, giving retirees set contributions rather than group benefits and allowing them to pick and choose the coverage they needed. Exchanges were developed that brought consumers and insurance companies – the buyers and sellers – together in one place. It seemed to work.Skip to next paragraph
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"It was a very efficient way to deliver retiree health benefits," says Aon's Sperling.
Now advocates of the private exchanges hope they will help bring the same kind of rigor to the overall health-care market. In a private exchange, as in Obamacare's public exchanges, insurance companies will have to compete for individuals in a retail marketplace. In the past, insurance companies only had to compete for companies' group plans in a business-to-business marketplace.
"Insurance companies have to step up their game, or people will vote with their feet," says Sperling.
Like the original Medicare exchanges, advocates say the new online malls will also give employees the ability to build plans, eliminating the benefits they may not need.
"The really big way that exchanges will help control costs is, we recognize that a significant percentage of people right now are overinsured for medical care," says Eric Grossman, a senior partner at Mercer. "A private-exchange platform can really help an employee figure out how to make more appropriate medical purchasing decisions."
Skeptics contend all this may save costs at the margins, but it does nothing to address the overuse of the medical system and freewheeling consumption habits of American health care. "I haven't heard an answer on that," says Lutes.
For the consumer – the tool-and-die maker sitting in the cubicle – the private exchanges will bring a lot more choices. What level of coverage does an individual want? What deductible? By most accounts, people will have to pay more for their insurance and care.
"We think of it as this linkage between choice and responsibility, and so the more choice an employee gets, the more responsibility they have," says Mr. Jenkins, whose firm makes software for the exchanges. "And so they've got to understand that, they've got to be equipped with the decision-support tools necessary, and then when they're done, it has to work."
As befits the Digital Age, online tools will guide consumers through the plethora of decisions. But along with the selections might come an infinite number of ads across their computer and iPhone screens, pitching everything from breast cancer screenings to cholesterol tests.
Still, for most individuals, health care will remain a face-to-face relationship with a doctor, and despite its steady march into the Google era, health-care decisions will be made with a different thought process than the purchase of a pair of shoes or an airline ticket.
This doesn't mean the $2.8 trillion health-care system won't be going through some dramatic changes, however. Among the nation's largest companies, for instance, traditional group insurance plans may even disappear altogether.
"There's probably more uncertainty than we've seen in 30 years about what the future is going to look like," says Helen Darling, president of the National Business Group on Health in Washington, D.C.