Imagine a health insurance system for the employee of the future.

A woman sits at her tool-and-die station, say, in a mid-size company in the Midwest, listening to a self-selected song list on her iPhone14 as she prepares to begin her day. An alert is pushed through her employer-sponsored health-care application, which syncs with its online health exchange, notifying her that a clinic 15 miles away is offering a special: $400 for a routine screening. She is always careful to have one every year, and she is due for an appointment.

She notices now, too, a 3-D pop-out ad on a thin glass interface in front of her, where she is using her index finger to flip through news topics on her personalized morning digest. The ad is promoting another clinic 30 miles away, offering an exam for $350. So she has a decision to make: Her employer's health plan will contribute only $250 a year for a screening. It's her responsibility to decide which clinic and which price she prefers. In the end, she chooses a convenient clinic a few blocks away, even though it is charging $500. She's gone there before, the staff have always made her feel comfortable, and she has the means to pay the difference anyway.

Just five years ago, her choice would have been much simpler. Her employer would have offered health insurance through one carrier. She would have made an appointment within her network, had the exam, and paid her $25 co-payment with cash. But since then, her company has shifted to a private exchange in which she and other workers have to shape their own plans, choose the benefits they want, and select the networks from which they will get their services.

The system gives them a lot of choice – and can potentially save them money. But it also requires individuals to make a number of complex decisions, and "shop" for services.

Welcome to the system that may soon be coming to a cubicle near you. While headlines have focused on all the rancor surrounding the public health-care exchanges being set up under President Obama's health reform law, businesses across the country are moving to change the coverage they offer employees in ways that are just as dramatic – and may end up having a bigger effect on individuals' lives and the US economy.

From taking tighter control over the health insurance market themselves to pushing decisions and costs down to individuals, businesses are experimenting with a host of new ways to offer health-care coverage, spurred in part by the launch of the Affordable Care Act, but also by the inexorable rise in the cost of medical care in the United States. The moves promise to change a social compact that has existed between employers and employees over health-care coverage for more than a half century.

Already, for instance, several large corporations have announced they are setting up private exchanges like the one the fictitious tool-and-die maker belongs to. More than 1 million workers are set to purchase plans on a private exchange in 2014, and by some estimates, as many as 40 million workers will be enrolled in such private exchanges by 2018.

"Going from 1 million to 40 million in five years is ... hypergrowth," says Rich Birhanzel, managing director of Accenture's Health Administration Services.

Another study by Mercer, a global consulting company that launched a private insurance exchange for large employers in January, predicts that by 2018, nearly 30 percent of the commercial market will be served by private insurance exchanges. The company recently announced that it had signed up 33 employers for its private-exchange platforms for 2014. That includes companies like Petco and the energy firm Kinder Morgan, and others ranging in size from 100 to 30,000 employees.

Aon Hewitt, the nation's largest private health-care exchange, has signed up Walgreens, Sears Holding, and the Darden restaurant group and expects to have more than 600,000 employees covered under plans in its marketplace in 2014.

But unlike their public cousins, whose primary purpose is to offer affordable insurance to the 47 million Americans who are uninsured, private exchanges promise to bring the individual tailoring of the Digital Age to the place where the majority of Americans now get their health care – the workplace. For businesses, private exchanges are a way to improve efficiency and contain runaway costs in a competitive environment.

"Whenever you have competition on a retail basis, prices go down," says Ken Sperling, national health exchange strategy leader at Aon Hewitt, and one of the architects of the private health exchange concept. "And an exchange is a very efficient way to bring buyers and sellers together to drive competition."

• • •

The basic idea of the exchange is to create an online mall, or a retail-like experience akin to Expedia or Amazon, and make insurance companies compete head-to-head for a new wave of individual customers. The state exchanges set up by "Obamacare" do the same thing.

But private exchanges could also drive a consumer-driven revolution in health care, bringing the razor-sharp metrics of the Google era to an industry better known for one-size-fits-all employee health plans. Online technology may have revolutionized how Americans shop, bringing with it a brave new era of profiling and individually targeted advertising (as well as the stuff of government surveillance by the National Security Agency). But when it comes to paying for health care, few people, up to now, have given much thought to those incomprehensible itemizations of fees, printed out on multiple pages, each reassuringly stamped, "This is not a bill." Now they will increasingly have to track everything – and make their own choices.

"It's a changing paradigm," says Shawn Jenkins, founder and chief executive officer of Benefitfocus, a technology company that produces the underlying software for insurance exchanges. "Technology is part of that, economics is part of that, politics is part of that, and consumer expectation is part of that.... An employee would say, 'why do I only get one option? I want a lot of options, I want it on my phone, why can't I just see this stuff?' "

Yet some industry analysts see private exchanges as simply another way to sell insurance or package employee benefits online. Many are not convinced technology will offer the cost-saving efficiencies its self-interested promoters insist it will.

"You're seeing a lot of talk about private exchanges, not a lot of action," says Thom Mangan, chief executive of United Benefit Advisors, an employee benefits advisory firm in Chicago. "Employers are taking a wait-and-see approach – except for the very national companies, such as Walgreens and Darden."

"With the profound changes in the insurance market, that distribution methodology is a bit of sideshow," adds Mark Lutes, a health-care lawyer at Epstein Becker Green in Washington, D.C. "We're so Expedia-focused that we think that the solution is somehow the presentation as opposed to the product.... That's just moving around the deck chairs of the Titanic."

Changes already under way in the health-care industry could accelerate the use of online exchanges, however. Over the past decade, large corporations have almost uniformly stopped paying health insurance altogether, opting instead to "self-fund," or "self-insure."

This means that most large private employers today – 83 percent, according to a recent survey by the Henry J. Kaiser Family Foundation – are paying the costs of their employees' health care directly. They still work with insurance companies, because insurance companies are primarily the ones who negotiate with hospitals and care networks on pricing. In that sense, employers are simply "renting" the insurance company's networks, and paying them an administrative fee to process their employees' claims. But if a worker gets sick, the employer pays the bill. The employer does often pay for a "stop-loss" insurance policy, which will cover claims over an amount like, say, $20,000.

And Obamacare currently exempts self-insured plans from many of its mandates, including the $6,350 cap on out-of-pocket expenses for individuals and $12,700 for families.

What this means is that self-funded companies will be able to utilize the personalization that an insurance exchange can offer. All other plans, including those on Obamacare's exchanges, will be much more constrained by the law's mandates.

The exchanges may appeal to many smaller companies in particular. More and more smaller firms are looking to stabilize their health costs by giving employees set amounts of money per month to purchase individual health insurance plans. While this approach has been tried in the past, it turned out to be an administrative nightmare, since companies that had a relationship with a single insurance carrier suddenly found themselves having to deal with five or more carriers. Under the new public and private exchange systems, though, the administrative details can be taken care of much more easily with Internet-based management software.

"In the old days, we might have to give the employee an 11-by-17 piece of paper in 8-point font that had 25 different plans on it," says Aon Hewitt's Mr. Sperling. "We would totally confuse him."

• • •

The genesis of the current employer-sponsored health insurance model, historians say, sprang from the competition for workers during World War II. Wage and price controls constrained employers from using higher pay to lure talent. So firms instead began to include health benefits as an added value – and the idea took hold and shaped the basic private system the country has today.

Since then, a loose and informal "social contract" has evolved in the US, under which workers have generally come to expect health insurance benefits as part of their compensation. But a consensus about a "right" to health care has never coalesced in the US as it has in other industrial democracies. And the country remains deeply ambivalent about efforts to try to cover every person as a social "entitlement," either through the government or private business. The very word "entitlement" enrages many conservatives.

While the conflicted feelings about the nature of the social contract lie at the heart of the political fight over Obamacare, ideological battles are only part of the forces at work here. Since American health care is uniquely embedded within the competitive forces of business, the exploding costs of care have forced many small employers to reevaluate the benefit of providing coverage. This is especially true in firms with many low-skilled workers.

As recently as 2000, nearly 70 percent of American firms, including nearly all large companies, offered their workers some kind of health plan, according to the Kaiser Family Foundation. But over the past decade, those numbers have dropped, particularly among smaller companies. Today, only 57 percent of all American firms offer health benefits to any of their employees. Even though this encompasses about 150 million workers, it still represents only 6 out of 10 workers at these firms. The rest either do not qualify for benefits, or opt out because they feel they can't afford them, as more and more of the costs are shifted to workers themselves. Many of them find coverage elsewhere. In some cases, companies are using temporary workforces to avoid having to pay health insurance altogether.

Larger companies still place a high value on competing for the best workers, and the vast majority offer health plans, even though the costs have become a substantial burden.

"I've spoken to senior VPs of HR [human resource departments] of large companies, and they do not think that ... sending their employees to the exchanges to fend for themselves is a way to keep their employees healthy or happy," says Ben Wanamaker, executive director of health care at the Clayton Christensen Institute, a think tank in San Mateo, Calif. "In most businesses, having their employees healthy and happy matters."

Many large companies, in fact, are experimenting with new kinds of coverage, spurred both by escalating costs and Obamacare's "employer mandate," which, even though delayed one year, requires all businesses with 50 or more workers to offer health insurance or incur a tax penalty. Some are even bypassing the insurance system altogether and making deals with the health networks their employees use.

Wal-Mart, relentless in its quest for greater efficiency, has begun to negotiate with health-care networks across the country, setting its own fees for certain types of services for some of its 2 million employees. Other companies such as Perdue Farms, Lowe's, and Toyota have also contracted directly with health networks – or even begun to hire doctors and assemble their own pools of physicians. Employers like the big three American automakers and Boeing have developed programs to hire health-care providers exclusively for their employees who have been diagnosed with certain costly ailments.

"There are some thought-leading employers that have been experimenting with it for some years," says Mr. Lutes, the Washington health-care lawyer. "But there needs to be a lot more of it, because they're the ones who are ultimately paying for their employees' care...."

Programs are equally in flux at smaller companies. Some may decide not to provide health care and pay a penalty, sending their workers instead to the public exchanges, where they will get a significant subsidy.

Other firms, both large and small, will no doubt turn to the emerging new private health-care exchanges, giving their workers a set amount and letting them go into the marketplace and buy their own plans tailored to their needs.

Still, the question about the private exchanges remains: Will they actually save companies – and the nation – money, or will they just prove more costly and cumbersome, particularly for employees?

• • •

The concept of buying health-care coverage in an online mall-type marketplace gained prominence in the mid-2000s, well before the emergence of this year's public and private exchanges. That's when Medicare added new programs offering a wider range of health plans and drug benefits for retirees.

Since not all Medicare recipients needed the full range of supplemental benefits provided by their corporate plans after retirement, it made sense for companies to provide a suite of individual care options, giving retirees set contributions rather than group benefits and allowing them to pick and choose the coverage they needed. Exchanges were developed that brought consumers and insurance companies – the buyers and sellers – together in one place. It seemed to work.

"It was a very efficient way to deliver retiree health benefits," says Aon's Sperling.

Now advocates of the private exchanges hope they will help bring the same kind of rigor to the overall health-care market. In a private exchange, as in Obamacare's public exchanges, insurance companies will have to compete for individuals in a retail marketplace. In the past, insurance companies only had to compete for companies' group plans in a business-to-business marketplace.

"Insurance companies have to step up their game, or people will vote with their feet," says Sperling.

Like the original Medicare exchanges, advocates say the new online malls will also give employees the ability to build plans, eliminating the benefits they may not need.

"The really big way that exchanges will help control costs is, we recognize that a significant percentage of people right now are overinsured for medical care," says Eric Grossman, a senior partner at Mercer. "A private-exchange platform can really help an employee figure out how to make more appropriate medical purchasing decisions."

Skeptics contend all this may save costs at the margins, but it does nothing to address the overuse of the medical system and freewheeling consumption habits of American health care. "I haven't heard an answer on that," says Lutes.

For the consumer – the tool-and-die maker sitting in the cubicle – the private exchanges will bring a lot more choices. What level of coverage does an individual want? What deductible? By most accounts, people will have to pay more for their insurance and care.

"We think of it as this linkage between choice and responsibility, and so the more choice an employee gets, the more responsibility they have," says Mr. Jenkins, whose firm makes software for the exchanges. "And so they've got to understand that, they've got to be equipped with the decision-support tools necessary, and then when they're done, it has to work."

As befits the Digital Age, online tools will guide consumers through the plethora of decisions. But along with the selections might come an infinite number of ads across their computer and iPhone screens, pitching everything from breast cancer screenings to cholesterol tests.

Still, for most individuals, health care will remain a face-to-face relationship with a doctor, and despite its steady march into the Google era, health-care decisions will be made with a different thought process than the purchase of a pair of shoes or an airline ticket.

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This doesn't mean the $2.8 trillion health-care system won't be going through some dramatic changes, however. Among the nation's largest companies, for instance, traditional group insurance plans may even disappear altogether.

"There's probably more uncertainty than we've seen in 30 years about what the future is going to look like," says Helen Darling, president of the National Business Group on Health in Washington, D.C.