SECTION14. EMPLOYERPRACTICESANDHEALTHPLANNETWORKS PRIVATEEXCHANGESANDDEFINEDCONTRIBUTIONS Aprivateexchangeisavirtualmarketthatallowsemployerstoprovidetheirworkerswithachoiceofseveraldifferenthealth benefitoptions,oftenincludingsupplementalorancillarybenefitsoptions. Privateexchangesgenerallyarecreatedby consultingfirms,insurers,orbrokers,andaredifferentthanthepublicexchangesrunbythestatesorthefederalgovernment. Thereisconsiderablevariationinthetypesofexchangescurrentlyoffered: someexchangesallowworkerstochoosebetween multipleplansofferedbythesamecarrierwhileinothercasesmultiplecarriersparticipate. Theexchangeoperatormay establish standards for the plans offered and maynegotiatewithinsurersoverthepriceandservicesprovided. Althoughthere hasbeenconsiderableattentiontothepotentialofprivateexchangestochangethemarketforemployer-basedcoverage, participation thus far has been quite modest. • Fourpercentoffirmsofferinghealthbenefitswith50ormoreworkersoffercoveragethroughaprivateexchange. These firmsprovidecoverageto2%ofcoveredworkersinfirmswith50ormoreworkers[Figure14.16]. Thesepercentagesare thesameasthosein2016. • Firmsofferinghealthbenefitswith50ormoreworkersthatdonotalreadyofferhealthbenefitsthroughaprivate exchangewereaskedwhethertheyhadconsideredofferingcoveragethroughaprivateexchange. Tenpercentofthese firmsareconsideringsuchanapproach,lowerthanthepercentagelastyear(18%)[Figure14.15]. Somefirmsuseadefinedcontributionapproachtocontributetowardthecostofhealthinsurance. Adefinedcontributionisa set dollar amountofferedtotheworkerbytheemployer. Workersmaythenselectoneofseveralplans,payingthedifference betweenthedefinedcontributionandthecostoftheirchosenhealthinsuranceplan. Thisallowsafirmtoofferalargervariety of health plans to workers and to structure contributions or other rules to encourage workers to choose more efficient plans. Someprivateexchangesencourageemployerstouseadefinedcontributionapproachtoencouragecompetitionamongthe participating insurers. • Firmsofferinghealthbenefitswith50ormoreworkersandthatdonotalreadyofferbenefitsthroughaprivate The Kaiser Family Foundation and Health Research & Educational Trust / Page 219