Employee Enrollment in Private Exchanges Exceeds Projections

More than three million U.S. residents have enrolled in employer-sponsored health plans through private insurance exchanges for the 2014 benefit year, three times more than it projected last year, according to an analysis released Thursday by Accenture, Modern Healthcare reports.

According to Modern Healthcare, the estimated number of workers with such coverage has exceeded the firm's projected enrollment. Last year, Accenture projected that one million individuals would use such exchanges this year (Demko, Modern Healthcare, 6/12).

Accenture estimates that the number of people using private exchanges to enroll in employer-sponsored health coverage will increase to about 40 million by 2018, exceeding the number of people projected to enroll in the federal and state exchanges established under the Affordable Care Act, the New York Times reports (Carrns, New York Times, 6/12).

Richard Birhanzel, the firm's managing director of health administration services, said the analysis was based on data from reports by publicly traded companies, as well as insights gathered from working directly with insurance companies. He said strong marketing efforts by the private exchanges' operators likely played a role in the rapid increase in enrollment (Modern Healthcare, 6/12). Birhanzel added the enrollment spike was driven by small- and mid-size businesses with up to 1,000 employees (New York Times, 6/12).

Benefits, Drawbacks to Private Exchanges

According to Modern Healthcare, private exchanges allow employers to move from a stringent benefits system to a more defined employee contribution system. The exchanges also could help companies stabilize benefit costs. However, as a result, more costs could be shifted to the employees (Modern Healthcare, 6/12).

Birhanzel noted that about one-quarter of individuals who enrolled in benefits through such exchanges selected plans with less coverage than they would have under traditional employer-based plans. He also said that workers could have chosen the less costly plans because they had lower premiums or opted to trade off some health coverage for other types of insurance, like life and disability, which are also offered in the exchanges (New York Times, 6/12).