N.C. Chamber Considers Private Exchange Instead of Obamacare | Eastern North Carolina Now

    Publisher's note: The author of this post is Dan E. Way, who is an associate editor for the Carolina Journal, John Hood Publisher.

    Private coverage would allow businesses to provide health insurance at lower cost

    RALEIGH  -  "Scared" of the impact Obamacare may have on their businesses, some North Carolina employers are considering private health insurance exchanges as a way to continue providing medical coverage to employees at a lower cost than the mandated insurance under Obamacare. IBM recently used a private exchange to shift 110,000 retirees from a company-sponsored health plan to a competitive insurance marketplace.

    Gary Salamido, vice president of governmental affairs for the North Carolina Chamber of Commerce, said the Chamber could create or partner with a private health exchange to help members contain costs.

    "There's nothing that prohibits private exchanges from happening" in North Carolina after Obamacare takes effect, Salamido said. "We're looking at it pretty directly. I can't get into a lot of detail right now, but the North Carolina Chamber is looking at what are options for our members."

    IBM cited unsustainable cost increases for retirees' health plans when the company notified former workers it would pay an annual contribution into a health retirement account when retirees became eligible for Medicare.

    The retirees could use that money to buy a Medicare Advantage policy or supplemental Medicare coverage from among competing plans offered on a private insurance exchange operated by Extended Health, a private Medicare exchange operated by Towers Watson & Co. in New York.

    Sears, Time Warner, and Darden restaurants also have moved retirees into private health exchanges.

    Private exchanges have been in existence for more than a decade. Many have developed as companies move away from traditional defined benefit plans, in which the employer selects the health insurance plan and pays the majority of an employee's costs. Exchanges enable companies to shift to a defined contribution model, in which the employer pays a set amount into a savings account for each worker; the employee can use the savings account to help pay for insurance coverage chosen by the employee from the exchange.

    Some private exchanges work with a single carrier and the employer continues to select the insurance provider; others are multi-carrier entities that use brokers or consultants to offer a variety of plan choices.

    "It's a good idea," said Devon Herrick, senior fellow and health economist at the Dallas, Texas-based National Center for Policy Analysis, said of the North Carolina Chamber setting up a private exchange.

    "There's nothing inherently wrong with the idea of an exchange. It's essentially a marketplace," Herrick said. But "the problem" with the Affordable Care Act is that its exchange "is a highly regulated marketplace" that imposes criteria such as minimum standards on buyers. The Obamacare exchange limits the type of policies consumers can purchase and sets prices that may be unaffordable without some form of tax subsidy, Herrick said.

    The Affordable Care Act, as Obamacare is formally known, requires individuals to have health insurance starting Jan. 1, 2014. It requires businesses with more than 50 employees to provide health insurance beginning in 2015, but businesses that enroll in the Obamacare exchange in 2014 will have to choose from the policies listed, which may be more expensive than those offered by private exchanges.

    Individuals and employers that do not buy health insurance will pay a fine, enforced by the IRS through income tax returns. The fines help fund tax credits for those buying health policies on the Obamacare health exchanges and pay for unreimbursed emergency health care for the uninsured.

    "In a nutshell, the more businesses learn, the more uncertain and, for lack of a better word, the more scared they are of the bill," Salamido said.

    So the Chamber is looking for solutions at the state level.

    "Groups may come together to offer private exchanges to give people options, to give small businesses options in the interim. At least at that juncture there will be something available to them that gives different affordability levels for those plans," Salamido said.

    A private exchange would let employers make "independent decisions based upon what's available in the marketplace" and is more affordable than Obamacare for their situation, Salamido said.

    About half a dozen private health insurance exchanges sell plans in North Carolina, said Sam Gibbs of eHealthInsurance.com, the pioneer of electronic health insurance marketplaces.

    Based in California, eHealth began offering individual and family health plans on the Internet in 1999, two years after the company's founding. It is licensed to sell in every state and partners with more than 180 health insurance companies. Gibbs, who is based in Asheville, is senior vice president and president of government systems for eHealth.

    Gibbs said he has had conversations with state Chamber of Commerce officials about their interest in a private exchange.

    "What the Chamber of Commerce will do is ... contract with a technology company like an eHealth to be their technology platform for this private exchange," Gibbs said. "They will get some type of compensation, and if it's a broker-based compensation model from that entity they'd be eligible to share some type of remuneration from that."

    eHealth has "other relationships that are similar to this," he said.

    The Chamber is most likely to offer its members a private exchange for part-time workers. It would be less costly to work through an existing entity that already has a technology platform and digital record processing capabilities than creating a system from scratch, Gibbs said.

    If a company decides not to provide employee health care, it could direct its employees to the Obamacare exchange and its tax credits.

    However, some employees may earn too much to receive a tax credit. They could be referred instead to a private exchange for an individual or family plan. Those plans may follow Obamacare mandates fully or provide greater flexibility. For example, Obamacare does not require adult vision or dental coverage, but that may be provided in a policy on a private exchange at a price lower than an Obamacare policy.

    Gibbs' company and some of those other half dozen web brokers, as they are known, also will offer separately the federally approved, subsidized plans on the Obamacare federal exchange to North Carolina residents beginning Oct. 1, Gibbs said.

    Some market analysts believe private health exchanges are about to grow dramatically. Accenture Research, a global management consulting company, is among them.

    An Accenture Research study projects "private exchange participation will approach public exchange enrollment levels as soon as 2017 and surpass them soon thereafter. The result: In 2017 approximately 18 percent of the American public will purchase insurance through exchanges, radically transforming the health insurance landscape."

    Gibbs believes North Carolina will show mixed results regionally.

    "North Carolina is somewhat unique in that its population [is] split right down the middle. You've got about half the population that's all along the I-85 corridor all the way through Raleigh-Durham, and the other half of the population is really rural," he said.

    "These private exchanges are going to be more for the larger population areas where you've got companies that [have] more than 50 employees, more than 100, more than 200 and not so many part-time," Gibbs said.

    "In the big population areas you'll probably see a lot of them, but I'm not sure somebody in my hometown [of Beaufort] is going to build a private exchange for the [67,000] people who live in Carteret County," he said.
Go Back


Leave a Guest Comment

Your Name or Alias
Your Email Address ( your email address will not be published)
Enter Your Comment ( no code or urls allowed, text only please )




Jail is Reopened Statewide, Government, State and Federal Judge Issues Order on Jail

HbAD0

 
Back to Top