Employee Benefits and the New Health Care Landscape: How Private Exchanges are Bringing Choice and Consumerism to America's Workforce

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Benefits: The Accidental Entitlement

When running a marathon, you don’t begin at the starting line. You begin when you decide to enter the race. Then you focus on your physical fitness, your diet, your clothing and gear, and a host of other factors before actually starting to run. Similarly, we can’t simply look at the private exchange marathon from this point forward; rather, we need to consider the history of benefits and health insurance in the United States—and elsewhere—as a reality check on the complexity and consequences of providing improved access to health care and the need to proceed carefully.

Private exchanges work by fostering efficient markets for benefits with the right balance of supply– and demand–side incentives. Indeed, ...