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Mercer courts employers with private exchange

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Mercer, the New York-based health benefits broker, has started offering a new health insurance exchange as a way for employers to offer more choices and potentially lower costs to their workers.

The Mercer Marketplace will offer health coverage from four companies—Aetna Inc., Cigna Corp., UnitedHealthcare and Anthem Blue Cross and Blue Shield.

Indianapolis-based Anthem also started its own health insurance marketplaces this year in Indiana and eight other states. Anthem expects the exchanges to serve employers covering about 30,000 people.

The exchange concept is a centerpiece of President Obama’s 2010 health reform law, especially as a way for individuals to buy health coverage with federal subsidies. However, most Indiana employers are shying away from the public exchanges and instead eyeing private exchanges run by individual health insurers or by brokers like Mercer and Aon Hewitt.

Employer interest appears to be particularly high in Indiana. In a 2012 survey of employers by Mercer, 41 percent of Indiana companies with 500 workers or more said they would use a private exchange to offer health benefits.

Nationally, 29 percent of employers with more than 500 workers said they would consider a private exchange. And interest was even higher among smaller employers.

“We’re definitely seeing an interest,” said Andrew Rosenberg, the leader of Mercer’s health and benefits practice in Indianapolis. He said he has had six meetings with employers in the past two weeks, although no employer has committed to use the exchange to offer health benefits in 2014.

Mercer’s exchange will offer five standardized health plans from each of the four companies. The exchange will accept only employers with 100 or more workers.

The main selling point for the private exchanges is that they could help employers control and possibly even reduce costs for health benefits.

Employers that use a private exchange would contribute money into an account on the exchange for each worker—more for those seeking family coverage and less for those seeking single coverage. This is called “defined contribution” health benefits, as opposed to the “defined benefit" that most employers now purchase for their workers.

Using a defined contribution strategy, employers could then increase that contribution by a set amount each year—effectively shifting the risk of fast-rising health insurance premiums onto workers.

In a presentation Rosenberg makes to employers, a fictional company paying an average of $7,800 for health benefits for each of its 1,000 workers could save $5 million over five years by increasing its defined contributions just 3 percent per year—as opposed to a more typical 7-percent increase that many employers have experienced in the recent past.

“Really, cost is what gets people’s attention,” Rosenberg said. He added that Mercer Marketplace hopes to achieve savings for employers by aggregating their buying power with health insurers.

Whether the defined contribution approach goes down well with workers remains to be seen. One reason it might, Rosenberg noted, is that the private exchange gives workers more insurance policies to choose from—which may help them avoid paying for unneeded coverage.

For example, a single worker without a spouse and with no plans to have children could choose a policy that does not offer maternity coverage, thus reducing his or her premiums. Right now, maternity coverage is fairly standard in employer-sponsored health plans.

“We know that most employees are over-insured and that they would select less-rich benefits, given the option,” Rosenberg said.

Also, Indianapolis-area hospital systems are now forming “narrow networks” that will offer cheaper premiums if a worker and his or her dependents seek care only from that one hospital system.

Rosenberg noted that Mercer Marketplace will handle the enrollment for all kinds of insurance an employer may offer to its workers. This could include not only health benefits, but also dental, vision, life, accident, auto, home, critical illness and even pet insurance.

Mercer Marketplace will charge an administration fee, and Mercer will still earn money through employer fees or through commissions from insurers, which are passed on to employers as part of their premiums.

“This is not the end-all of benefits, Rosenberg said. “It’s an option. It’s an option we think can help reduce costs, simplify administration.”

 

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  1. I had read earlier this spring that Noodles & Co was going to open in the Fishers Marketplace (which is SR 37 and 131st St, not 141st St, just FYI). Any word on that? Also, do you happen to know what is being built in Carmel at Pennsylvania and Old Meridian? May just be an office building but I'm not sure.

  2. I'm sorry, but you are flat out wrong. There are few tracks in the world with the history of IMS and probably NO OTHER as widely known and recognized. I don't care what you think about the stat of Indy Car racing, these are pretty hard things to dispute.

  3. Also wondering if there is an update on the Brockway Pub-Danny Boy restaurant/taproom that was planned for the village as well?

  4. Why does the majority get to trample on the rights of the minority? You do realize that banning gay marriage does not rid the world of gay people, right? They are still going to be around and they are still going to continue to exist. The best way to get it all out of the spotlight? LEGALIZE IT! If gay marriage is legal, they will get to stop trying to push for it and you will get to stop seeing it all over the news. Why do Christians get to decide what is moral?? Why do you get to push your religion on others? How would legalizing gay marriage expose their lifestyle to your children? By the way, their lifestyle is going to continue whether gay marriage is legalized or not. It's been legal in Canada for quite a while now and they seem to be doing just fine. What about actual rules handed down by God? What about not working on Sundays? What about obeying your parents? What about adultery? These are in the 10 Commandments, the most important of God's rules. Yet they are all perfectly legal. What about divorce? Only God is allowed to dissolve a marriage so why don't you work hard to get divorce banned? Why do you get to pick and choose the parts of the Bible you care about?

  5. Look at the bright side. With the new Lowe's call center, that means 1000 jobs at $10 bucks an hour. IMS has to be drooling over all that disposable income. If those employees can save all their extra money after bills, in five years they can go to the race LIVE. Can you say attendance boost?

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