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Private health exchange concept gathering steam in Minnesota

Offering employees more choice through a private health exchange, which is based on a defined contribution approach to health insurance, appears to be gathering steam in Minnesota.

Doherty Employer Services, a Minneapolis human resources outsourcing firm announced Friday that starting on Sept. 1, the company will offer the My Plan by Medica private health exchange program to its business customers. Through My Plan by Medica, companies can choose how much they want to spend on employees’s healthcare while it will also allow individual employees to select the coverage they want from among 20 different health plans. It is a novel approach to providing employee health benefits. Medica is one of the largest health insurance companies in Minnesota.

The company’s CEO Valerie Doherty said the company is the first professional employer organization in the nation to adopt a defined contribution approach to providing health coverage as an outsourced service for customers.

Doherty noted that regular surveys it conducts with clients revealed that they wanted the company to provide and manage a health insurance program for employees.

“It was one area we knew we had to provide a service for,” Doherty said, noting that her company already provides vision, dental and life insurance among other outsourced services.

But one of the reasons Doherty eschewed traditional insurance in favor of a private health exchange is because she believes that the defined contribution approach is a win-win for both employers and employees.

Employers can control costs and budget appropriately while employees are not forced to have to pick between a $200 deductible plan or a $2,000 deductible plan that their employers pre-selected for them. Rather they can choose from among 20 different plans that My Plan by Medica offers.

About half of Doherty Employer Services’s 150 clients have 50 or fewer employees and up until now My Plan by Medica was not unavailable to such small employers.

“We are rolling it out right now to our clients and we expect it to be very well received,” Doherty said.

While the announcement from Doherty Employer Services can benefit its current customer base, most of whom are based in the state, another Minnesota startup should be cheering this announcement.

That startup is Bloom Health, whose health IT platform powers the My Plan by Medica private health exchange.

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