There are several players in the private exchange market — Aon Hewitt, Mercer, Buck Consulting and Towers Watson. These companies have invested significant capital into developing or purchasing exchanges as an alternative to the public state exchanges due to start enrolling individuals starting in October, and then full swing next year. Additionally, other smaller benefits companies, such as Zane Benefits and Bloom Health, have implemented private health exchanges for employers.

According to the Society for Human Resource Management, unlike the public, government-run exchanges scheduled to launch this fall for plan year 2014, private exchanges do not provide a conduit for the government to subsidize the purchase of policies by low-income employees.

Instead, private exchanges let employers provide eligible workers with an employer subsidy to purchase policies that comply with the federal Patient Protection and Affordable Care Act and meet the specifications of state insurance regulators. The new model is sometimes referred to as "defined contribution health care," comparable with employer contributions to 401(k) retirement plans, in which employers "monetize" their commitment in the form of a defined contribution rather than a defined benefit.

In the case of private health exchanges, employers give each eligible employee fixed amounts for either individual or family coverage, regardless of the plan the employee chooses within those tiers. Workers add their own salary-deferred contributions in an amount they select, and choose among differently priced plans from competing health insurers — taking into consideration factors such as varying premiums, deductibles and networks. If employees select a high-deductible plan that is health savings account eligible, they can determine how much extra money from their paycheck they would like to defer into the HSA.

"Every employer, whether they participate in exchanges or not, has a vested interest in the health and performance of their employees," said John Zern, U.S. health and benefits practice director with Aon Hewitt. "Investing in wellness and health improvement will continue to be a priority with employers regardless of their delivery model. That said, exchanges may enable employers to reduce the staff time focused on benefit plan design, increasing attention on efforts that improve health and lead to increased workforce performance."

According to Aon Hewitt's post-enrollment analysis for plan year 2013:

• 39 percent of employees with access to policies through the exchange enrolled in a consumer-driven health plan —a high-deductible plan with an HSA or HRA. In 2012, before their employers shifted to the newly launched exchange, only 12 percent of these employees were enrolled in a CDHP option.
• Conversely, the number of exchange-eligible employees who enrolled in a traditional preferred provider organization plan decreased from 70 percent in 2012 to 47 percent in 2013.

However, while a significant number of employees migrated to high deductible, low premium CDHPs when given the choice, a fair amount instead chose to increase their health coverage by purchasing a plan with a lower deductible at a higher premium:

• For 2013, 32 percent of employees chose a plan similar in type to their current coverage (e.g., PPO to PPO), while 26 percent of employees "opted up" and chose to pay more for broader coverage.
• Forty-two percent of employees chose to reduce their regular payroll contributions by selecting a less comprehensive plan.

"Benefits consulting in its current form will have something to lose" if the private-exchange market becomes robustly developed, says Chris Calvert, health practice leader for Sibson Consulting.

"The key will be to transform, in the way that pension consulting did when companies moved to defined-contribution 401(k) plans. We are moving from assessing the differences among insurance carriers based on clients' needs to assessing the proper platform — exchange-based or traditional ­— through which our clients should deliver health benefits," Calvert told CFO magazine.

The reference to 401(k)s is apropos, because that is the funding model most companies that use private exchanges are moving to for now. Broadly defined, exchanges are online portals populated with a variety of easily comparable health-plan options offered by one or more insurance carriers that contract with the exchange. By making a defined contribution that employees can use to buy a health plan that matches their needs, a company will know what its healthcare costs will be at the start of a plan year.

And, depending on the exchange, the company may have a chance to offload much of the administrative load related to health benefits.

Because of those attractions, it seems inevitable that competition will expand in the private-exchange field. Benefits consultants want to be ready for that.