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Mercer

Every time a big company makes the leap to a private exchange, the industry pays close attention – especially Mercer’s own Sharon Cunninghis, North American Health & Benefits Leader. In this Human Resource Executive article, Sharon shares her thoughts on private exchange trends and opportunities, including best practices for employers who are making the switch. Her advice: “Help people understand the new benefits program, how it differs from what was in place previously, the added advantages of the new program and available support services,” she says. “Secondly, make sure that there’s a good, solid project plan from an implementation perspective – technology, new administrative processes and tools.” Sharon goes on to explain why, ultimately, health and benefits solutions of the future, Mercer Marketplace 365 in particular, will be seen as a “true healthcare destination” – a comprehensive platform that goes above and beyond today’s typical private exchange, serving as a resource not just at open enrollment, but throughout the year. With 6% of large employers either already using a private exchange or planning on it for 2017 – and an additional 27% considering adoption within 5 years – this is a trend to watch.

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A growing number of employers are moving Medicare-eligible retirees to special retiree medical exchange platforms. Mercer’s National Survey of Employer-Sponsored Health Plans found that 27% of retiree plan sponsors are using an exchange to provide coverage to Medicare-eligible retirees in 2016, up sharply from just 15% two years ago. The programs are attractive because they offer a wider range of choices for retirees and also take on benefit administration.

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We’ve been tracking employer adoption of, and interest in, private health exchanges through Mercer’s National Survey of Employer-Sponsored Health Plans for the past few years. Currently 6% of large employers either use an exchange now or will implement one this year for 2017. That’s doubled from 3% using an exchange in 2014 – a strong rate of growth, even if the numbers are still small. Perhaps more telling, more than a fourth of large employers say they are considering moving to an exchange within five years.

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Medicare Advantage premiums are expected to increase around 3.5% in 2017. While this increase is in line with what we see for active medical plans, we need to keep in mind that the target membership for these plans is retirees, many of whom are on fixed incomes. The Medicare Advantage plans are popular with seniors because they typically include some services not included in traditional Medicare. About a fifth of all large employers (21%) provide medical coverage for Medicare-eligible retirees today on an ongoing basis, and an additional 11% still provide a plan to a closed group of Medicare-eligible retirees. Employers have gravitated to private exchanges as a way to offer retiree medical coverage. Among those that sponsor retiree coverage, 13% now offer Medicare-eligible retirees a private exchange, up from 9% last year, and 15% will use an exchange for their 2017 plan year. An additional 18% of retiree plan sponsors say they are considering moving their Medicare-eligible retirees to a private exchange within five years.

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Employee Benefit Adviser has recognized Mercer’s Sharon Cunninghis, the global leader of our private exchange Mercer Marketplace, as one of 17 private exchange leaders who are shaping the future of health care. “These executives from all parts of the industry are leaders in the space, forecasting trends and serving as ushers for what some are calling a new era of health care,” says the article. Indeed, Mercer’s National Survey of Employer-Sponsored Health Plans 2015 found that 6% of large employers either already use a private exchange for active employees or will by next year’s open enrollment – a 50% increase year-over-year – and that an additional 27% are considering switching to an exchange within five years.

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Private benefit exchanges and the Affordable Care Act (ACA) are tied together in several ways. Most obviously, the ACA introduced the concept of the public health exchange. But it also created new challenges for employer health plan sponsors that called for new solutions. It added serious administrative complexity, as employers were required to comply with new tracking and reporting requirements. It added cost by imposing new standards for plan value and coverages. At the same time, it greatly increased the need for employers to reduce cost by creating a future 40% excise tax on high-cost plans. For the many employers that see their benefit program as a key tool to attract and retain talent, this has meant rethinking fundamental strategies.

 

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It’s going to be a busy open enrollment season for Mercer Marketplace. In 2014, its first year of operations, Mercer’s private benefits exchange provided access for 52 companies, with 220,000 eligible employees, retirees, and dependents. For 2015, those numbers have grown by about a factor of five: 247 companies have chosen Mercer Marketplace to provide access to more than 1,000,000 lives. Additional enrollments for 2015 will continue throughout 2014.

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The slow growth in Medicare spending has meant slow growth in premiums for Medicare Advantage Plans. With the average monthly premium rising by just $2.95 in 2015 -- and 61% of enrollees seeing no increase at all -- CMS is projecting that enrollment will grow by about 3% in 2015, to reach an all-time high of just over 16 million. This article suggests that controls on Medicare spending built into the ACA are one reason for the moderate growth in premiums, but another may be that enrollees are choosing less expensive plans, with more restrictive pharmacy benefits and higher out-of-pocket costs. Retiree medical exchanges make it easier for employers to offer a range of Medicare Advantage plans, giving retirees the opportunity to select the level of coverage that suits their needs. For example, Mercer Marketplace Medicare Exchange (Transition Assist) includes a wide variety of individual Medicare Advantage options offered by national and local carriers. The availability varies by geography, but most retirees will have two to five Medicare Advantage options, some with zero premium.

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The confluence of a number of factors has Chronic Hepatitis C (CHC) exploding on the radars of employers who until now gave it relatively little attention based on low prevalence and minimal therapy costs.

 

First, the Centers for Disease Control recently expanded screening guidelines to include testing of the entire population between 49 and 69 years of age in an effort to increase diagnosis among the estimated 3.2 million Americans who carry the virus and aren’t even aware they have it. At the same time, under the ACA, 8 million previously uninsured individuals (among whom it’s estimated the greatest numbers of undiagnosed are concentrated) now have health care coverage, potentially increasing utilization and demand for CHC treatment. And, a much-buzzed-about $1,000-per-pill breakthrough drug therapy — now standard on a number of plan formularies — has many gasping and questioning its value.

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In this article, having a choice of medical plans is identified as a disruptor. Three things to consider: First, most people with coverage from their employer only have one or two medical plans available to them. An exchange, whether private or public, does offer up more choice. Secondly, as we know from our first-year experience with the Mercer Marketplace private exchange, when you give people helpful decision support along with choice, the majority will "buy down" to a less expensive plan because they discover that they have been over-insured. Third, it is well documented that millions of dollars are spent annually in the U.S. on care that is inappropriate or unnecessary. Looking up prices, actively negotiating with providers, and using home remedies or over-the-counter medicines -- all of which tends to happen when health care consumers have more skin in the game -- is a good thing. The more active we all are as consumers, the better.

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A year ago, the consultancy Accenture estimated that 1 million individuals would enroll for health coverage through a private exchange in 2014. Last week, in a report that's being widely circulated, they tripled their estimate -- now they say that 3 million individuals are enrolled through an exchange. While some very large employers made the move to private exchanges for 2014, driving up enrollment, the main reason was simply higher-than-expected demand. I'm not surprised they were surprised -- we got a hint of the phenomenal interest in this new model last fall when we tabulated the results of our 2013 survey and found that a quarter of all employers were considering moving to an exchange within just two years, and nearly half were considering moving within five years. The Accenture report confirmed the trend we've seen with the first employers to sign onto Mercer's own private exchange, Mercer Marketplace -- when employees have the choice, they select a lower level of coverage, saving money for themselves and their employer.

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Interesting article in BI. Mercer Marketplace is available to companies with 100 or more employees. We have partnerships with more than 25 medical carriers, including many BCBS plans. Mercer's platform provides access to the full suite of benefits including medical, dental, vision, life, disability, and voluntary benefits. The decision deadline for January 1, 2015 effective date is in July. 

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