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What In The World Is A Private Health Insurance Exchange?

Public health insurance exchanges are government- established health insurance marketplaces that are being set up under the Affordable Care Act. Consumers will be able to go to those public marketplaces to shop for health insurance plans. But what are private health insurance exchanges? The question comes up because a number of firms are bringing out products for the private health insurance exchange market. The terminology can be confusing.

The private exchanges are marketplaces, too, but they are created by entities such as private sector companies rather than state or federal government. Employers can go to the exchanges to select health insurance plans of various insurers that the employers can then offer to their workers as benefits choices. Who pays for the plans, and how, varies by plan design and other factors.

Health insurance brokers can do business clients a world of good by explaining the distinction between the two. By the way, Dan Maynard, president of Connecture, a Chicago firm that has developed a technology product for this market, is an advocate of the private single-payer exchanges. They provide an effective way for health plans to lower costs to employers, as well as enable employers to provide workers with more health plan choices, he maintains. That might be a point to raise with interested business clients.

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