How insurance exchanges will work

Published: Sunday, December 30, 2012 at 6:01 a.m.
Last Modified: Thursday, December 27, 2012 at 3:23 p.m.

Last week we started a series exploring major trends unfolding in the workplace over the coming year and beyond. We started by discussing why companies will have to get creative and offer non-traditional benefits for the younger workforce.

This week, we move on to the next trend and look at how the insurance exchanges created by the new health care law will both disrupt and transform the type of health benefits provided by employers.

So what the heck is a health insurance exchange?

The same way a stock exchange is an online place where individuals and businesses can see stocks listed to compare and decide what stocks to buy, so will an insurance exchange list different carriers offering different plans that have met certain standards as to price, minimum benefits and consumer information, so that buyers can make choices.

Just like there are several stock exchanges (the NYS exchange and the NASDAQ), each state also will have different organizations running the exchanges, either a state or federal agency, a private nonprofit and/or member-run health insurance companies (or co-ops).

Beginning in 2014, exchanges will serve primarily individuals buying insurance on their own and small businesses with up to 100 employees. But in the future, states can choose to include larger employers.

Here is where I see a likely disruption combined with huge potential for transformation to occur: When larger businesses can participate in the exchanges and begin to do so, the exchanges will become a truer marketplace, with healthy competition and transparency, and all the good that comes with it.

Another trend that could fuel this new marketplace is that more employers may choose to get out of the health benefits business and give employees a lump-sum insurance benefit to go buy their own. This is similar to the way more companies have gotten out of the retirement business by abandoning traditional pension plans (chosen by and paid for by the company) in favor of funneling money into a 401k or 403b plan, giving the choice and decision over to the employee.

This is conjecture, of course. And realistically, all discussions on this topic should begin with: There are known unknowns, and there are unknown unknowns.

Next week: Using company culture in social media for recruitment and retention.

Eva Del Rio is a human resources consultant and business owner. Send questions to or find her on Facebook.

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