Large Employers 'Fully Committed' to Company-Sponsored Benefits, Express Mixed Reaction to Private Health Insurance Exchanges

April 29, 2014 — The majority of large employers remain fully committed to providing an array of company-sponsored benefits and are currently uncertain about whether private health insurance exchanges will be a part of their benefits strategy, according to a national survey of mostly Fortune1000-ranked companies. The survey, conducted by Pacific Resources, focused on capturing the current perspective on private exchanges from some of the largest employers in the United States.
"For large employers, it will be critical to determine, at some point, whether moving active employee health coverage to a private exchange is the right move for their organization and its plan participants," said Paul Rogers, president and COO, Pacific Resources. "This is a complex decision about a new benefits strategy that is still evolving and the survey results tell us that, right now, most large employers are not ready to make that decision."

A majority of large employers (80%) view their employer-sponsored benefits as a strategic asset for attracting, recruiting and retaining employees and an integral part of their employee engagement and productivity strategy. Only 13% view it as a required expense of being in business.

The survey found that 75% are fully committed to providing an array of employer-sponsored benefits as a part of their total rewards program and will continue to look at all potential tactics to manage the costs associated with their benefits plans including exchanges, wellness programs and other incentives.
A significantly smaller percentage of large employers (21%) are taking a wait and see attitude regarding their company-sponsored benefits and expect to delay any changes until they better understand the full impact of the Affordable Care Act (ACA).

When it comes to private exchanges, nearly all large employers (91%) believe they have a €˜good to excellent €™ understanding of the opportunities, challenges and decisions required to move to a private exchange, their levels of confidence and interest are varied.

While a little more than half of large employers (51%) are at least somewhat confident that private exchanges will be a viable alternative to current methods of providing health coverage to active employees, the other half (49%) are not confident or are unsure.

The current level of interest in private exchanges is split, with half showing some level of interest and the other half indicating no interest at this time. Currently, a little more than one-third (37%) have no plans to evaluate private exchanges and 13% have conducted an evaluation and decided not to move forward with an exchange as a replacement to their current medical benefit plan.

However, 35% indicated that they have begun to evaluate private exchanges as a potential benefits strategy for active employees, 11% are interested in evaluating exchanges and 3% are currently in an exchange.

When asked how they would evaluate private exchange vendors, 34% said they had not determined an approach, 25% would perform the evaluation using in-house resources, and 25% would engage a consultant that does not sponsor an exchange. Only 13% indicated that they would engage their existing consultant if that consultant sponsored a private exchange.
For those willing to consider a private exchange, half did not expect a potential move to take place until 2017 or 2018 while the other half were unsure of the timeframe for any such move.

When asked to rank the most important factors in determining their move to a private exchange, 85% identified cost savings as most important.
However, when asked about the projected percent of savings they would need to achieve in the first year in order to justify the move, more than half (55%) said they didn €™t know. The rest of the responses were fairly evenly dispersed across a range of options from less than 2% to greater than 10% savings.
After cost, 66% said that giving employees more choice which may better meet their coverage needs was an important factor followed by minimal network disruption (37%) and having a mature product with proven success to manage cost and administrative capabilities (36%).

There was a strong preference for remaining self-insured with 60% of large employers indicated they would want to remain self-insured if they moved to a private exchange while only 13% indicated they would move to fully-insured programs.
The remaining 27% were undecided but cited concerns about moving to fully-insured products for various reasons such as the ability to manage administrative and state requirements and the long-term cost effectiveness for fully insured products.

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