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Sunday, 23 November 2014 22:00

BCBS exchange drives employee awareness of coverage costs

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Operators of private health exchanges pitched them as a way for employers to better control their costs for coverage, reduce the administrative burden, and give employees more say in the benefits they want and need.

Now Blue Cross Blue Shield of Michigan says a private health exchange it launched three years ago has started generating an added benefit: a greater awareness among employees of how much their health coverage actually costs.

Blue Cross Blue Shield says 94 percent of the users of its Glidepath private health exchange know what their employers contribute to cover the cost of the coverage. That compares to just 38 percent of employees whose employers buy their coverage through traditional means.

That kind of price transparency can pay dividends in controlling the cost of coverage by further introducing consumer forces into health care, said Jason Hover, director of group business strategy at Blue Cross Blue Shield.

“The more engaged consumers are in their health and their own health care, the more they will become efficient users of the system,” Hover said.

People enrolled in high-deductible health plans generally “care more about the cost of their care,” Hover said. Nearly 80 percent of the employees at companies that use Glidepath opt to buy a health plan with a $1,000 deductible, twice the national rate, according to Blue Cross Blue Shield.

Those employees, because they have to pay more out of their pocket for their care, are also more apt to research the cost charged for an elective procedure such as an MRI and choose accordingly, Hover said. Quite often in a given market, the costs charged by providers for a procedure can vary widely.

“We know if folks are enrolled in higher deductible plans, they know more about the cost of their care. Historically, they’ve had little reason to know what those costs differences are, or even care about those differences,” he said. “In a world where consumers are more responsible and engaged in that care, they are going to find out those differences and they are going to spend their dollars more effectively than they have in the past, and that directly lowers overall costs in the system.”

Private health exchanges — not to be confused with public exchanges at healthcare.gov formed under the federal Affordable Care Act — represent a major change in how employers buy health benefits. Employers using a defined-contribution model for coverage can set the amount they will contribute to coverage and employees then use a private exchange such as Glidepath to buy the benefits they want, based on how much their employer contributes and what they can afford.

If an employee opts to buy a high-deductible, lower-cost medical plan, they can use whatever money they may have left over from the employer’s contribution to buy other benefits an exchange may offer, such as dental, vision, short- and long-term disability, or life insurance.

Employees using Glidepath typically select a lower-cost, higher-deductible plan than what they’ve had in the past, or are “right-sizing their benefits” for medical care and will buy ancillary benefits, Hover said.

Since forming in 2011, Glidepath has signed up 65 mid-sized and large employers across the state and enrolled about 30,000 members, both employees and their dependents. That’s about 50 percent higher in employers and members than a year ago and a growth trend that Blue Cross Blue Shield expected, Hover said.

Nationally, a number of outlooks predict strong growth over the next few years in the use of private health exchanges.

Nearly one-third of the 1,200 large employers surveyed by PricewaterhouseCoopers said they may move active employees to a private health exchange within three years.

Global benefits firm Mercer reported last month that 247 companies that collectively have 500,000 active employees and retirees now use its chosen Mercer Marketplace private exchange. That’s up from 52 companies with 110,000 active employees a year ago for Mercer.

Locally, the Michigan Chamber of Commerce this summer launched MiChamberMarketplace that joined a market that includes Glidepath, Royal Oak-based iSelect Custom Benefits Stores, and private health exchanges operated by national benefit consultants such as Mercer and Aon.

What actually occurs hinges on how well the exchanges prove their ability to help employers fix and contain health care costs, Hover said.

Blue Cross Blue Shield of Michigan expects to publish data in 2015 on whether Glidepath influences health care cost trends for employers. Early findings suggest that it is, “but it’s premature to affirmatively state that it absolutely is doing that,” Hover said.

“We believe in the growth and potential of the private exchange market, but I think some of the realization of its potential is going to be dependent on, ‘Can this market prove that it is fundamentally lowering health care costs for employers and consumers?’” Hover said. “That it’s not just a year-one right-sizing of benefits, but that ongoing, this type of engagement model provides value. That’s the trend we’ll have to see play out.”

Blue Cross Blue Shield’s Glidepath is designed for employers with 50 employees and more. This summer, the insurer rolled out www.coverageforcompanies.com, a similar venture for smaller employers with fewer than 50 employees.

A private health exchange is best suited for employers who want to take “a bit of a step back in determining every nuance they want to offer in a plan” and offer employees a choice in fashioning their own benefits package, Hover said.

An exchange may not work so well for large employers “to stay really deep in the nuances of benefit design (and) the specifics of how that insurance plan is going to function.”

“A private exchange is a great solution for a lot of employers, but it’s not the right solution for every employer,” Hover said. “For those employers who want to stay really, really deep in the design and administration of benefits, I don’t think this is going to be the most effective model for them.”

Read 2977 times Last modified on Sunday, 23 November 2014 21:43

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