The Affordable Care Act (ACA) introduced the concept of a public health insurance exchange (like HealthCare.gov) to most Americans. However, what many business owners and benefits managers may not realize is that California has been home to the most-successful private health insurance exchange for more than 20 years.
The CaliforniaChoice private exchange for small businesses was introduced in 1996. It was the first multi-carrier, employee-choice program established by a private organization specifically to help employers with 100 or fewer employees find affordable health insurance.
A Look Back at Its Origin
The private health exchange concept grew out of a need to give small employers more options than a single-carrier solution. In the 1980s, small businesses were generally only able to choose a single carrier to meet the needs of their entire staff.
Employees often did not like the “one size fits all” approach, so the multi-carrier program was born. It broadened the options available and gave employees the power to find a carrier and benefit plan that made sense for their individual needs.
How Does a Private Exchange Work?
With a multi-carrier private exchange, like CaliforniaChoice, you determine the amount you want to spend on your employees’ benefits. You can choose a Fixed Percentage (50% to 100%) of a specific plan and/or benefit, or you can choose to contribute a Fixed Dollar Amount for each employee. It’s your choice.
Your employees then get to choose the HMO, PPO, or other coverage that best fits their individual or family health care needs. Like with travel aggregator websites like Priceline and Expedia, a health exchange gives your employees the ability to shop and compare plans before making a choice.
Each employee applies your contribution toward the cost of the health plan they like best. If the cost for their preferred plan exceeds your contribution, they simply pay the difference. And everything is consolidated on a single bill, regardless of what each employee selects.
The table below shows other ways an exchange is similar to online tools you may already be using. It includes the value-added benefits offered by each and the value-added features of CaliforniaChoice, the only multi-carrier exchange in California developed for small businesses.
| Product or Service Category | Direct (Single Source) | Consolidated (Multi-Source) |
| New and Used Autos or Trucks | Individual dealerships – you have only vehicles from one manufacturer from which to choose
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Shop for every brand using an auto megastore.
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| Retail | Individual stores – you have only a single brand to shop: Nike, Coach, Brookstone, etc.
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Shop online or at big-box stores like Amazon and Costco, where you can find multiple brands.
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| Real Estate Nationwide | You can view listings for only one location/metro area at a time using city-specific franchisees of Coldwell Banker, Better Homes & Garden, and RE/MAX.
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You can view and compare properties nationwide using online services like Redfin, Zillow, or Trulia.
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| Fashion | Individual stores – you can shop only a single brand: ALDO, Burberry, J. Crew, Levi’s, Tommy Bahama, Calvin Klein.
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You can shop and compare multiple brands at department stores like Nordstrom and Macy’s.
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| Travel | You can visit individual hotel, airplane, and rental car websites and view only one brand at a time.
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You can shop and compare multiple hotels, airlines, and car rental firms – planning your vacation through a single site like Priceline and Expedia.
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| Small Business Health Insurance | Carrier-direct health care: you can get coverage directly from a single carrier – limiting choice for your employees.
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You can shop and compare plans from seven different differ health plans through CaliforniaChoice.
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*All product, company names and logos are trademarks™ or registered® trademarks of their respective holders. Use of them is for reference only and does not imply any affiliation with or endorsement by them.
It’s Easy to Quickly Compare Available Products and Services
CaliforniaChoice is similar to online tools and retailers you may already use. It makes shopping for employee benefits easy for everyone, similar to CarMax, Nordstrom, Amazon, Costco, Priceline, and Expedia.
Multi-Carrier Vs Single Carrier Solution
You know how convenient it is to go to the mall and find multiple shops in the same location – or to go to Costco or Amazon and be able to shop for a wide variety of merchandise in one place. The same principle applies to health insurance for small businesses.
Travel websites like Priceline and Expedia are popular because they allow you to find flights for lots of airlines and cars from many different car rental companies – as compared to going to the individual websites of American, Delta, United, Alamo, Avis, Budget, and others to get schedule and cost information. You generally know what you want to spend and when you want to travel, so these aggregator sites make it easier.
In the same way, a multi-carrier, employee-choice program like CaliforniaChoice lets your employees shop and choose from a broad selection of medical carriers in one place – while also giving them options for other coverage like Dental and Vision.
One of your employees might choose a PPO because of a particular doctor or hospital in their network, while another employee who rarely visits the doctor might choose an HMO. A third employee might choose a Health Savings Account (HSA) compatible HMO because of cost and tax considerations. The choice is up to each employee. But you still have just one bill to pay for all of your employees.
And when you renew, you have the option to adjust your premium contribution up or down, giving you complete control over what you spend on employee benefits for another year.
Talk With Your Broker
To learn more about how a multi-carrier program can expand your options for employees, contact your broker. If you don’t already have an employee benefits broker, we can help you find a CaliforniaChoice broker to speak with about a quote for Medical, Dental, Vision, and other coverage.
Your broker may also tell you about the Automated Choice Profiler from CaliforniaChoice, which gives you and your employees the power to compare plans not just based on premium, but on doctor availability, quality, affordability, and how you expect to use your plan.
