For decades, US employers have stuck to a defined benefits model, in which the company offers standard health benefits and takes on most of the financial burden of healthcare costs.

Private exchanges are a way for employers to cut back on that burden by using an alternative model known as a defined contribution. Here employers contract with a private exchange and set a defined contribution. They then select products to offer their employees. Employees use the employer contribution to shop around for a health plan that works for them.

Is this a good deal for the employer? Absolutely, employers can begin to escape the double-digit annual rate increases insurance companies charge them.  Is this a good deal for employees, not so much! Now employees have to educate themselves about the different plans out there and find the ones that fit for them. Typically what ends up happening is that employees end up in plans where the employee contribution is the smallest. These plans have lower cost but at a higher deductible.

High deductible heath plans are not a good idea unless you budget for that high deductible. Most employees fail to budget for this and delay care at times when it is most needed. Their untreated conditions continue to worsen, entering a vicious cycle until a visit to the emergency room.

Where is the marketplace competition?