An estimated three million people currently receive employer health benefits through a private exchange, according to new report released Thursday at AHIP Institute 2014.
The report, by management consulting firm Accenture, showed three times as many people enrolled in private exchanges for 2014 benefits as the company originally forecast last year. Accenture analysts expect the trend to continue, projecting total enrollment in private exchanges will ultimately surpass state and federally funded exchanges, reaching 40 million by 2018.
"Private exchanges are experiencing hyper growth and will significantly change the role consumers have in personalizing their own employer health benefits," said Rich Birhanzel, managing director at Accenture Health Administration Services. "With the first material open enrollment period concluded last year, private exchanges have an unprecedented opportunity to differentiate and prove the value of this new model over traditional self-managed plans."
The study suggests that the rapid growth of private exchanges has expanded benefit choices but also presented employees with important financial trade-off decisions. Of those people currently enrolled in private exchanges, Accenture estimates 25 percent purchased less health coverage (measured in actuarial value) than they had previously.
Birhanzel said those choices may have been to decrease monthly premiums, but they also added out-of-pocket costs for patients with higher deductibles. Accenture deems this a "benefit trade-off," and it accelerates the amount of reimbursement that hospitals and physicians need to collect directly from patients.
Accenture's research estimates that out-of-pocket collections from patients with employer-sponsored plans will increase by 7 percent – or an additional $3.7 billion – by 2018. If accurate, this would add to the difficulties that health providers currently face with patient collections. The American Hospital Association estimates more than $45 billion in uncompensated care was provided by U.S. hospitals in 2012.
Challenges facing private exchanges include both data and financial management. While exchanges allow employers to offer an expanded set of products across multiple carriers, the amount and complexity of data being managed also grows. The report indicates that, with such a large volume of information, issues arise around how to pass data back and forth across organizations and how to handle exception processes and reconciliation.
Many exchanges are also deferring billing functionality or delegating it to carriers altogether. The report indicates that mature exchanges will help emulate an "ideal experience:" an employer pays one bill (consolidated billing) across all carriers and products with assurance that the balance matches employee elections on the health insurance exchange (reconciliation).