Businesses turn to 'private exchange' health insurance

Fed up with the unpredictable cost of health insurance for his small business, Mike Sarafolean last year made a dramatic change: Instead of picking a plan to offer workers, he now sends them to a "private exchange" or marketplace where they compare and choose their own insurance. And the amount his company pays toward coverage is capped.

The move puts his St. Paul-based company on the leading edge of a nascent trend that could shape how more employers offer and pay for health benefits in the coming years.

It's part of an ongoing evolution in job-based health benefits that's gradually shifting cost and responsibility to workers.

The private exchanges, mainly run by former insurance executives and employee-benefit consulting firms, operate in more than 20 states.

While representing a tiny fraction of workplaces, the movement may be about to grow. One of the nation's largest employer benefits consulting firms, Aon Hewitt, said Wednesday it will launch an exchange aimed at large employers. It hopes to have at least 100,000 workers enrolled by early next year.

Proponents say the effort shields employers from unpredictable premium increases because they'll choose how much to increase their contribution each year, and that may be less than premiums actually increase. If so, workers would make up the difference.

Contact HBUS Inc for information on how you can participate in such a program.

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