The advantage of defined contribution for employers is that it takes the guesswork out of budgeting for healthcare costs from year-to-year, says Madison. The employer might include an annual cost-of-living increase to the defined contribution but will no longer be "captive to waiting on the insurance company."
Private HIX allow health plans to retain "key employer relationships while transitioning those employers to defined contribution," says Richard Birhanzel, managing director of health exchanges for Accenture. There are also increased opportunities to offer members a broader array of customized products such as dental, life, and disability coverage.
It is too soon to tell if employees purchasing health insurance on a private HIX will reduce their healthcare costs. Consumer groups are concerned of course but employers and insurers are anxious for employees to have the proverbial skin in the game and become more cost conscious about their medical care.
Birhanzel says the marketplace will measure the success of private HIX in a number of ways, including the ability to reduce healthcare costs for employers and the ability to provide consumer choice that leads to more efficient and targeted use of benefits by employees.