To really dig deep into private exchanges, it would behoove employers to understand some of the characteristics different exchanges offer when choosing the providers and plans that would benefit both employees needs and employers costs.
Though there are still plenty of unknowns when it comes to understanding what exchanges can offer and if they are the right fit, Grant Hoffman, a general manager at Connecture, says there are several building blocks that will really define a private exchange.
The first critical step is credibility, Hoffman said, speaking Wednesday on private health care exchanges and the Affordable Care Act webinar sponsored by Employee Benefit News and Employee Benefit Adviser.
Whether youre an insurance carrier or sponsoring agent for an exchange, its a key component, Hoffman says. Without that basis of credibility its hard to take any subsequent steps.
Other considerations when reviewing different exchanges include having meaningful product choices, decision support tools and a return on investment.
With regard to meaningful choices, Hoffman adds that the range of choices will truly depend on the employers point of view noting that a meaningful choice doesnt necessarily mean overwhelming options.
According to a recent survey from Connecture, when asked what number of plans employees prefer, most employers tended to lean toward smaller numbers. Approximately 41% wanted fewer than five, and 44.3% wanted between five and 10, Hoffman said. A little more than 10% would prefer to have 10 to 20 plan choices.
Theres no one answer in terms of how much choice is too much choice, Hoffman added, but if you average this out there is a consensus that an unlimited amount is overwhelming.
Also, Hoffman adds, now that the some of the exchanges are reaching their second and third cycles, there are now core numbers on the positive returns on investment.
Depending on your core orientation, your interest in exchanges or the type might vary, Hoffman notes. Ive yet to interact with an employer group that would say that constraining costs and predicting costs [are] not important.
The deployment of private health exchanges is nudging employees into less expensive plans, he notes. According to research from Mercer, average actuarial value of the plans dropped from 80.4% to 71.9% on plans purchased through the exchange.
For employers, expenses actually became more predictable with defined contributions on private exchanges. Additionally, he adds, there were lower administrative costs associated with the private exchanges as well as a raised awareness from employees on what employers are contributing to health care coverage.
Deciding on an exchange
Still, employers can use help in choosing the right exchange or at the very least asking the right questions because the exchange landscape has grown, said Michael Martocci, a private health exchange strategy leader with ktp advisors.
When evaluating your private exchange, bear in mind some basic questions and criteria in your selections, he says, including:
- Does the exchange target Medicare retirees, non-Medicare retirees or active employees?
- Is the exchange single- or multi-carrier?
- What carries and products are available?
- What decision-support tools are available to help consumers make the right decisions?
For more information on this weeks EBN/EBA webinars, please click here.
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