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Private health exchanges bigger than Obamacare?

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Posted at 11:28 AM, Sep 20, 2013
and last updated 2013-09-20 13:33:17-04

Walgreens Pharmacies joined a growing list of corporations moving away from traditional health plans to private health exchanges which some experts predict will insure more Americans than Obamacare.

The consulting firm Accenture published a study predicting that one in five Americans will get insurance on private exchanges within five years, outnumbering the ranks of those expected to get insurance on the individual Obamacare exchanges.

With a private exchange, employers move from a "defined benefit" to a "defined contribution" model for providing health care. In other words, rather than promising a list of benefits, they give their workers a set amount of money to spend on a menu of insurance options available in a marketplace called an "exchange."

"It gives that employer some flexibility to set a flat dollar amount that meets their budget. And then turn the choice over to the employee," said Patty Conner, Director of Utah's Avenue H, a state-sponsored exchange small businesses can use to insure employees.

Proponents of exchanges say it benefits the consumer by allowing them great control of their health plan. They also say consumer involvement will help check the growth of health care costs that have been rising far faster than all other inflation.

"Employees are probably scared because they don't know much about it, but there's really nothing to be afraid of. From our three years of experience we can tell you that our employees love the concept of it," said Conner.

But some worry that shifting the health insurance model from benefit-driven to contribution-driven will make it easier for employers to scale back the proportion of premium costs they cover.

Utah architectural firm Prescott Muir switched to Avenue H this year. They have typically paid the full premiums for their employees' health plans, but rising costs forced a change.

Office manager Cindy Deverall said, "This is the first year we have taken a step back in terms of asking the employees to contribute, but they also got to choose a really great plan for what they contribute which they never had before."

Conner says she's aware of the fear that employers will abandon health insurance benefits because of rising costs and requirements of Obamacare, that doesn't seem to be happening.

"The trend that we're seeing and the overall statistics we're hearing nationally is that employers will continue to offer health care plans and contribute to that at a fairly substantial amount," Conner said.