The health care landscape in New Jersey will shift this summer when the state’s largest insurer launches its own online exchange, where employers give workers money to shop for coverage from a menu of plans.
Newark-based Horizon Blue Cross Blue Shield of New Jersey’s new Horizon Select will be available in July, marking the company’s entrance into the defined-contribution arena.
“We’re offering employers the ability to manage health care costs over the long term and to offer employees a personalized experience to choose a health plan that is right for them,” said Christopher M. Lepre, senior vice president for market business units at Horizon.
Horizon Select also reflects the ongoing transformation of the industry from the traditional “wholesale” model, where insurers sell products to employers who make health plan decision for workers, to a retail model where employees make their choices, Lepre said.
Horizon Select will operate alongside the new public health care exchange being launched in New Jersey on Oct. 1 under the Affordable Care Act, where individuals and small businesses with fewer than 50 workers will buy federally subsidized health plans; Horizon will sell plans on that public exchange. The Horizon Select exchange won’t compete with the public exchange because it will serve employers with more than 50 workers and target employers with up to 300 or 400 workers.
Lepre said employers will choose the menu of health plans to be offered to their workers. “These are employer-backed exchanges, driven by the employer,” he said.
Experts expect health care costs to continue rising, by at least single digits, and the employer will have the choice of either passing on those increases to their employees or absorbing them.
Lepre said under this new exchange model, “Employers have the expectation that this will at least mute their year-over-year increases and have it be predictable,” while providing employees with online “decision support tools” to help them chose the best plan for their needs.
Don Savoy is president of Savoy Associates, in Florham Park, a health insurance broker that distributes products from Horizon and other health insurers. He has 85 employees, and plans to join Horizon Select. He said the exchange will enable him to “budget on an annual basis what my health insurance expenditures will be, so I am not at the whim of the marketplace dictating increases every year.”
Savoy said the exchange will help employees by giving them choices that enable them to lower premiums, while also providing them with the information they need to choose a plan that will be most economical in the long run.
“In the past, I always picked the health plan for my people,” Savoy said. “I would say, ‘you are all going to fit into the same box, this plan is the right one for you.’ But I don’t know that. With these products that Horizon is rolling out, there will be an array of products, and it’s really up to the employee to make the decisions.”
Savoy said the experience to date suggests both employers and employees end up spending less when they switch to a defined contribution exchange. “When people are spending their own money and have decision-making tools, it is a matter of empowerment and consumerism.”
Mike Thompson, the New York metro health care practice leader for PricewaterhouseCoopers Human Resource Services, said, “One of the reasons that employers offer a private exchange is to offer more choices to their employees. It can be a simple way to buy into an off-the-shelf set of plans that offer a lot of choices to employees without (employers) having to deal with the administration on their own.”
Thompson said employees now typically pay between 20 percent and 30 percent of their premiums. While costs continue to rise for both employers and employees, “I don’t know that cost saving is the primary motivation (for exchanges) as much as shifting to more of a defined contribution approach over time, and to letting the employee choose what benefit fits their needs,” Thompson said.
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