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Posted: 6:00 a.m. Wednesday, April 2, 2014

More employers are setting up private exchanges

Private exchanges have nothing to do with Obamacare

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By Clark Howard

ClarkHoward.com


In the midst of the Obamacare rollout, more retirees are being offloaded to health exchanges by their prior employers. Even though this comes in synch with the Affordable Care Act, this move actually has nothing to do with Obamacare!

IBM kicked off this trend and now Time Warner has gotten on board, according to The Wall Street Journal. They're giving retirees the equivalent of a voucher and telling them to shop for health coverage on a private health exchange, much like active workers will be able to do in the coming months.

This concept of buying health care, either on an Obamacare-style state-sponsored health exchange, or with employers doing private exchanges, is in many ways a very good idea for employers to control cost. And it helps individuals figure out what you're actually buying and what it will cost you.

But make no mistake about it, IBM and Time Warner are doing this as something that's good for them to control their costs, first and foremost.

If that sounds too cold and calculating, consider this: There is no requirement that any corporation provide health care to its retirees. That's entirely optional and companies like IBM and Time Warner are choosing to do it. They just want to control how much it costs them, which sounds reasonable to me.

In a similar way, we're seeing a lot of employers giving you a set amount of money during open enrollment this fall and telling you to pick and choose among a variety of health plans. It's like the Obamacare idea of health exchanges, but it's actually unrelated to Obamacare as well. Employers are just trying to cap how much they pay by giving you an equivalent of a voucher and an array of shopping choices.

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