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Small Business Employee Benefits and HR Blog

The Utah Health Insurance Exchange is a Bad Joke

The Utah Health Insurance Exchange is like a bad joke.  No one likes it, but no one wants to hurt anyone's feelings.  utah health insurance exchange

The Utah Health Insurance Exchange was established in 2007 in an effort to provide a consumer-based alternative for small employers in Utah through the use of defined contribution health plans. However, the Exchange has experienced extremely poor participation to date.  This "pseudo defined contribution" solution is a bad product because the exchange:

  1. Limits employee choice to "participating" insurance companies and plans 

  2. Allows the health benefit plans to require 75% participation

  3. Does not allow for portability of the health insurance policies outside of employment

The Utah Health Insurance Exchange will not succeed unless changes are made.  Currently (outside of the exchange), true defined contribution health plans allow a Utah employer to contribute tax-free dollars to its employees' individual health plans with:

  1. Employee choice of any insurance company and plan

  2. No minimum or maximum participation requirements

  3. Unrestricted portability of health insurance

This is not what the Utah Health Exchange provides!

Health plans provided by the Utah Health Exchange are only portable if the employee's new employer participates in the Exchange.  

The state of Utah has already used $563,198 of taxpayers' dollars on the Utah Health Exchange since 2009, and has a current operating budget of $600,000/year for a staff of two. 

I hope Utah legislators soon realize that better market-based solutions already exist outside of the Utah Health Exchange.

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