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Western Pa. employers explore private insurance marketplaces to lower costs

| Friday, March 15, 2013, 12:01 a.m.

Western Pennsylvanian companies looking for ways to control rising health insurance costs are contemplating private marketplaces where their workers can take a set pot of money to buy the coverage they want.

Not to be confused with public health insurance exchanges being set up in Pennsylvania and other states for individuals who don't get coverage from their employer, the private exchanges are being developed for businesses that offer insurance.

Many of the 90 companies that belong to the Pittsburgh Business Group on Health are exploring the possibility of signing up with a private exchange, Executive Director Christine Whipple said.

“Ultimately, it is about managing costs moving forward and flattening trends as much as possible,” Whipple said. “And part of this strategy will be activating the employees through choice of plans so they make decisions based on their needs and what they can afford.”

Private exchanges are like their public counterparts in that consumers will access both via online shops.

But while public exchanges are being driven by the Affordable Care Act's mandate that virtually all individuals have health coverage, the move to private marketplaces is being prompted by employers' interest in controlling health insurance costs.

In these so-called defined contribution plans, an employer provides a fixed amount of money each year for workers to buy coverage. Just as defined-contribution retirement plans, such as the 401(k), are pushing out traditional pensions at many companies, these plans may begin to overtake the traditional health plan most employers provide to workers.

Once a business decides to go the fixed-contribution route, an employee needs a place to cash in their company contribution, which is where the private exchange comes in.

“The defined contribution is the concept where we can have a known spend each year and the exchange is the mechanism to make that happen,” said J.T. Shilling, a benefits consultant who runs the Pittsburgh office of consulting firm Mercer.

Mercer is one of several companies rolling out a private marketplace for health insurance for 2014. Buck Consultants, which has an office Downtown, was marketing its version to local employers on Thursday.

“One of the things that employers are really struggling with is the cost of delivery of benefits to their employees,” said Sherri Bockhorst, a Buck consultant.

Neither Mercer nor Buck have signed up Pittsburgh-based companies yet. But Shilling said he expects more companies to enroll.

A national survey of 2,800 employers by Mercer last year found 56 percent were considering a private exchange, up from 18 percent in 2011.

Highmark Inc., the state's largest health insurer, has been at the forefront of private exchanges in Pennsylvania. It was the first company to launch one, with a pilot private marketplace for small businesses in 2011.

For 2013, Highmark expanded its exchange, which it calls myBenefits, to employers of all sizes, spokeswoman Kristin Ash said.

“We currently have more than 100 companies using myBenefits, and we're talking with many, many more businesses as interest in this option is high,” she said.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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