Interest in Private Exchanges Grows Along With Rising Health Care Costs

Employees will continue to pay more for healthcare plans and face higher deductibles and copays as their employers try to control rising healthcare premiums, according to a recent survey from Wells Fargo Insurance. The survey of more than 70 insurance companies reveals that claim costs will increase in the high single digits next year. Dan Gowen of Wells Fargo says that it’s a strong indication that employers will pay higher rates. “Employers are exploring all available options to maintain and improve the health risk of employees, mitigate cost, and maximize their benefit investment,” he added. The survey also reveals that the top three employer product innovations in 2014 are accountable care organizations (ACOs), wellness programs, and narrow provider network offerings. Forty seven percent of all participants will launch their own proprietary private exchange by 2015. Nick Allen of Wells Fargo said that defined contribution strategies often simply shift costs to employees, and private exchanges may do little to change health care utilization. Product innovation and consumer engagement remain critical to achieve smarter health care spending, he added.

The survey also reveals that dental costs remain lower than medical costs due to lack of cost shifting from public to private plans and improvements in dental technology. Prescription costs have increased steadily over the past two years. This is expected due to the higher costs of specialty biotech drugs and higher use of these drugs as well as fewer generic drugs coming to market.
The following are rrojected increases in the national average cost of claims:
• HMO 7.5%
• Point-of-sale 7.7%
• PPO 8.3%
• Consumer driver health plans 8.6%
•  Exclusive provider organizations 8.9%
• Indemnity plans 9.5%
• Prescription plans 8.6%

For more information, visit www.wellsfargo.com.

Last Updated 09/23/2020

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