Shifting employees to exchanges provides no real advantage

August 1, 2012

Among the decisions employers are tackling is whether to keep their group health plans.

NATIONAL REPORTS - Among the decisions employers are tackling is whether to keep their group health plans. A new report by Truven Health Analytics says that large employers would fare better by continuing to provide health benefits through a group plan, rather than paying large penalties as employees move into exchanges.

"There is no scenario where both the individual and the company benefit by moving the employee into an exchange and not offering benefits," says Ray Fabius, MD, chief medical officer at Truven Health Analytics.

Truven examined several scenarios, such as eliminating coverage but providing employees additional compensation in such a way as to make the move cost-neutral to employers. Should employers choose to eliminate group plans without giving employees subsidies, the cost to the employee for coverage would be about $16,550 per year. Such reductions in total compensation packages would likely drive employees away, which would make the employer less competitive, Dr. Fabius says.

Such industry changes will drive further optimization in plan design to control health costs, according to Thomas Heatherington, senior payer executive at Accenture Health.

He says research shows that payers spend more than 75% of revenues on medical costs that remain largely out of their control.

"In the same way that successful retailers have developed new ways to identify and serve their customers, successful health insurers should create the ability to think about consumers in new ways-as individuals and households with behaviors and preferences that drive their healthcare consumption and well-being," he says.

The health-reform law's intent is to maintain the number of Americans covered by their employer and encourage more employers to provide health benefits, Dr. Fabius says.

"Health insurers are refining and scaling their operations to deliver the right level of service to the right consumers at the right time," Heatherington says. "The result is that insurers will increasingly adopt new business models, diversify their offerings and provide broader, more holistic services to consumers."