Health Insurance Exchanges Put Defined Benefits to the Test
The advent of private health insurance exchanges may provide employers with the opportunity to shift from defined-benefit healthcare coverage to defined-contribution. That's a paradigm shift that can be likened to the corporate shift from defined-benefit pension plans to defined-contribution plans such as 401 (k) retirement accounts.
For private exchange operators such as Aon Hewitt and Highmark, the defined contribution health insurance model is a way to address employer concerns about healthcare costs.
What we can expect to see is employers offering premium assistance through health savings accounts. Employees would have the option to select from a menu of essential benefits available through the HIE and would use the defined contribution option to help cover premiums and other medical expenses.
The model would enable employers to cap their healthcare costs. This would improve control of current expenses and future liabilities, while offering opportunities for employees to customize their healthcare benefits.
So, it may come as a bit of a surprise that employers are hesitant to embrace this new model.