Fidelity looks to scale up its exchange product

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With an already strong client base, Fidelity wanted to ensure the launch of its exchange product earlier this year did not disrupt existing relationships. EBA spoke with Joe Laurin, president of Fidelity Health Marketplace, for more on the strategy behind the company’s “go slow” approach with its new product and where Fidelity will be expanding next.

EBA: It has been nearly eight months since you launching your exchange, how is it going?

Laurin: It is going really well. We launched in sort of our backyard in Massachusetts and New York and our strategy was to go slow. We are Fidelity and oftentimes we are touching our existing good clients, so we wanted to make sure we had an offering that … had all the ‘i’s dotted and ‘t’’s crossed to make sure [we] were serving those existing clients really well. Our strategy was to go really slow at launch, which we did for last year’s benefits cycle.

We got a handful of customers in each of those markets and put them through open enrollment. The good news is things worked pretty well. This year, we are going to start to scale up in Massachusetts and New York and have entered California. We have hired sales reps out there and we have a group of clients in California already. Our plan is to continue to expand geographically as well as scale up in those states.

EBA: What is the timeline for other states?

Laurin: Our plan is to continue to add states as we can. Oftentimes, you have to go state-by-state and negotiate and sign contracts with each carrier locally. That is the long pole on the tent. We are going to continue to do that. … There is no set time line. As soon as we can get new states lined up, we are going to enter new states.

EBA: Why are you targeting small and midsize employers with your offering?

Laurin: The bigger companies already get what they need and want. They have market power so they get the service, the technology, the choice and certainly the pricing that they need because they have 200,000+ lives. In the small and midsize market, they don’t have that market power and haven’t enjoyed the things that are being brought to the big guys. One of our mantras is to bring to the small and midsize companies what the big employers have been enjoying already. It is technology, in part, that allows us to bring those things down market in a scalable and cost-effective way.

Employee Benefit Adviser, in partnership with business intelligence data analytics firm miEdge, presents the 2016 list of the top employee benefit brokerages in the country, ranked exclusively on health and welfare revenue. Revealed in descending order, the listing is based on Form 5500 reporting data as of Aug. 31.
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EBA: Do you work with brokers?

Laurin: We are a broker, which makes us a little bit different, in that we are the broker as well as we bring the technology to the end customer, the employer and employees. Currently, we are not working with other brokers. We have a lot of respect for them. But currently we are going on our own.

EBA: What is the future of your exchanges and exchanges in general?

Laurin: We all would have liked if the estimates [of 40 million lives by 2018 from] Accenture had been true. I think the pickup on the exchange model has been slower than a lot of folks anticipated and projected, which is for a number of reasons.

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The promise of the exchange was largely to help employers reduce costs. So what employers have done is found alternatives to an exchange model to achieve the same objectives. They have gone to high deductible plans. They have gone to self-insurance. Smaller and smaller companies have gone to a self-insured model. And, the Cadillac tax was postponed, which took some of the pressure off. I think the exchange model still has a lot of value and I do think it is going to be part of a winning model. But I don’t think it is panacea that everything thought it would be and obviously it’s not moving as fast as everyone thought it would be.

The reason for that is because the technology, which is important, is not the only answer. The winning model is going be something that brings the advantages of a traditional broker and the advantages of modern technology.

The traditional broker brings strategy, benefits consulting, plan design. If they are good, they help the [employer] align their benefits and business strategy. It’s a year-round relationship and engagement. Some of the myths of a pure private exchange model have been not providing those things and that is one reason we have avoided called ourselves an exchange per say, we use the word marketplace. I’m not sure how much of a difference that is. But to us, it has made a difference because we are a broker and we have the technology, so we feel like we bringing benefit beyond the one or two weeks of enrollment, but 52 weeks a year.

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