Why is Investor Confidence in Private Health Insurance Exchanges Growing?


The last few years have seen a lot of changes in the US health reform domain, particularly with the rise of public and private health insurance exchanges. The triggering point for all these changes was the passing of PPACA, or Patient Protection and Affordable Care Act. In a nutshell, the health reform required everyone to get health insurance or face penalties. The administration arranged for benefits and subsidies for people falling in lower income levels, and also arranged for marketplaces that will allow people to purchase health insurance through online exchanges.

The act also arranged for state exchanges that will operate according to federal guidelines. In recent times, these state exchanges have received a lot of attention and customer interest. However, in the last few weeks, the situation has changed drastically. The focus of many employers and customers is shifting towards private benefits exchange, a privately held and administered health insurance exchange that functions exactly like state exchanges. These private health care exchanges are owned and operated by a corporate or nonprofit group, and work on the rules set by the administration. There are several reasons for this sudden increase in popularity.

•These private healthcare exchanges are shaping up as a lucrative option for employers for offering health benefits to employees. Several employers, such as Walgreens, IBM, Time Warner, have moved their employees to these exchanges for providing them better coverage and reducing the overhead.
•These exchanges will also offer a wide range of benefits to employers looking to improve their healthcare offerings for employees. Employers will be able to put in a set amount for employees and encourage employees to find the plan that best suits their needs.
•There is a huge strength of employees across US that are going to make use of these exchanges. Several other corporates are going to shift to private exchanges very soon.
•These large corporate moves and inherent benefits of using such exchanges are proving favorable for private exchanges in the stock market as well. Investors consider them a great investment opportunity and are further strengthening their position in the market.

As the above reasons grab more ground in the market, more private exchanges are expected to crop up to meet the demands of the industry. There are rumors that big corporate giants, such as Walmart, are going to make a foray into the market very soon. Naturally, this will result in more competition and more growth. Taking a cue from the current scenario, many IT companies are looking to enter the market with their own private healthcare exchange solutions. With these reasons for increasing demand intact, these tech companies and investors can expect to make a fortune by betting on the private health insurance exchanges.


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