Nowadays, every turn of a newspaper page, click of a media page on the Internet, or flip to a news channel brings us to an update, or more likely a criticism, of the public exchanges. With all of the attention on this side of the exchanges, we might be forgetting about the private exchange. The private exchange serves as a channel for individuals and employers to purchase health insurance that is separate from the newly opened public exchanges developed under the Patient Protection and Affordable Care Act.
The biggest difference between the two stems from the fact that government subsidies aren’t available to those choosing to purchase health insurance from the private exchange. This explains why much of the news regarding private exchanges focuses on the group market, as employers that choose to participate in a private exchange provide employees with an subsidy to be used toward the purchase of health insurance, a method also known as defined contribution.