Private Exchanges vs. Direct Contracting

Private Exchanges vs. Direct Contracting

Private exchanges have become a hot ticket in healthcare over the past few years, thanks to the Affordable Care Act making the “exchange” a household word. Unlike the ACA’s public exchanges, a private exchange is owned and managed by a private entity rather than a government agency. It is essentially a marketplace for selling healthcare plans; when an employer joins a private exchange, employees choose from the handful of insurance carriers that are authorized to participate. Employees may also be able to purchase extra coverage in a private exchange, including:

  • Disability coverage
  • Supplemental plans
  • Long-term care insurance

The idea behind private exchanges is that they offer lower healthcare costs to the employer because they are set up to include defined contributions. They also are supposed to have fewer administration costs than traditional employer-sponsored plans; administrators are typically insurance agencies, private healthcare consultants or (in the case of self-insured employers) third-party administrators. And of course, proponents of the private exchange model say that they offer employees more health insurance options than other benefits models.

It sounds great, doesn’t it? But we have an even better option.

When it comes to top-notch healthcare benefits, direct contracting has all of these things and more. While most employers are still waiting to find out if they are saving any money by switching to a private exchange, GM&A is showing employers how they can start saving by 30% or more immediately by switching to direct contracting. We are also able to show employers that direct contracting offers truly consumer-driven care, because the private networks we form for our clients uses the claims data of the company’s own employees. It’s the best form of customized coverage available.

While private exchanges only hit the scene in 2009, GM&A has been providing direct contracting services for over a decade – so we have a proven model that employers can trust for the long-term. To learn more, contact us for a free health plan analysis.

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