Health Insurance Exchanges Put Defined Benefits to the Test
The whitepaper notes that employers generally like the private HIE model because it is flexible, can be customized to address the needs of any employer group, and can offer a broader range of retail products, such as dental and life insurance, than state or federally run public exchanges.
A recent Booz & Company research study indicates that more than 50% of surveyed employers would gravitate to multi-carrier exchanges while less than 30% prefer the single-carrier option. However, less than 20% are interested in a pure defined-contribution model.
It's true that defined contribution exchanges have had spotty results. Kaura points to Massachusetts, which as part of healthcare reform built a small group business exchange around defined contribution. It never took off.
Kaura says employers want a system that functions well and is easy to administer and understand. Some of the Massachusetts problem could be attributed to the administrative back end of managing and providing products through multiple carriers. "Some of the administrative challenges can get very complex very fast," he says.
Among the other challenges: It's a new idea so there are questions around tax implications, the effect of the ACA on minimum benefit requirements, and what defined benefits mean in terms of the ability to retain and attract the best talent.
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