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Private health insurance exchanges have generated a flurry of attention in recent years with big names such as Sears, Darden Restaurants and Walgreens moving their employees to private exchanges, and employer interest in the model shows no sign of slowing down.
Nearly half (47%) of employers surveyed by the Private Exchange Evaluation Collaborative, a nonprofit coalition of business groups, have implemented or plan to consider using a private exchange for full-time, active employees before 2018, up from 45% in 2013.
And for some employers who've made the jump to a private exchange, the move has been as much about the underlying role of benefits as a business strategy to attract and retain workers as it is about saving money over the long term.
"There's a philosophical shift I see occurring in the marketplace that is a question for each organization, and the question is: Are the medical plans we offer creating a strategic differentiator in the industry we are in, as well as among the workforce that we have?" says Don King, vice president, compensation and benefits for Envision Healthcare, which moved about 9,000 of its approximately 14,000 benefits-eligible employees to consulting firm Towers Watson's OneExchange in January. "When I looked at what we were offering, our designs were not that unique."
Smaller companies are feeling the allure of private exchanges as well. The Martin Group, a creative services firm in Buffalo, N.Y. that employs about 50 workers, has been with Lawley Marketplace - a private exchange offered through its broker, Lawley Insurance - for two years. The move was mainly prompted by a desire to get out of the day-to-day business of health care.
"The health care thing, as an employer, has always been a nuisance in that it's a cumbersome process every year," says Tod Martin, president and chief creative officer. And for small employers like Martin who do not have dedicated benefits staff, taking the weight of managing open enrollment off someone's plate - and handing it over to the exchange - can have huge appeal.
Tanna Davis, CFO of HOPCO Foodservice Marketing, a food services marketing company that works with restaurants, caterers, hospitals, schools and other food service providers in the Southeast, agrees. HOPCO moved its 170 employees to Liazon's...