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DC Model for Health Benefits

New private health exchanges offer large companies cost control. (Steve Raetzman of Mercer)

By Susan Kelly | Updated on April 02, 2012
While state insurance exchanges are mandated by healthcare reform to be up and running by 2014, some private health insurance exchanges that target corporations are already doing business, suggesting that healthcare benefits may follow retirement benefits’ shift to a defined-contribution model.

Benefits consultancy Mercer launched a suite of health exchange products last week, joining competitor Aon Hewitt, which announced a health exchange for employers last year. Bloom Health, a Minneapolis-based company that operates an exchange, was acquired last year by three health insurers: WellPoint, Blue Cross Blue Shield of Michigan and Health Care Service Corp., which operates Blue Cross and Blue Shield plans in four states.

Participating companies provide their employees with a lump sum and direct them to the exchange, where they can choose from an array of plans. With this arrangement, a company knows exactly how much it will pay each year and lessens its administrative burden, while employees get more transparency on what the company pays for their health coverage. And as employees shop at the exchanges, the competition for their business is expected to help contain health insurance costs.

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