One of the main things holding back adoption of private benefit exchanges is the definition of what exactly a private exchange is, a panel of experts said recently at a conference sponsored by PlanSource in Park City, Utah.

Nationwide, for the 2016 benefit plan year, Accenture estimates that 8 million people enrolled in a private exchange — a 35% increase over the prior year. The growth was fueled by midsize employers of 100 to 2,500 employees. “Things have decelerated a little bit in terms of rapid growth, however 35% growth is significant,” Scott Brown, managing director at consultancy Accenture, previously said. “We continue to see interest from employers and continued investment by private benefit exchange operators and those that participate in the space.”

Accenture originally estimated in 2014 that by 2018 enrollment of employees under 65 years old and dependents will grow to 40 million, and still believes that prediction to be accurate.

What is holding back adoption currently is a “difficult question and why the exchange market is not carrying as much weight as we first thought it would,” said Mark Stelzner, founder and managing principal of San Francisco-based HR consultancy IA.

There are an “unbelievable” amount of employers conducting feasibility studies around private exchanges and employers are interested, “but the challenge is if you have seen one exchange, you have seen one exchange,” Stelzner said. “There is no standard definition.”

The unclear definition of a private exchange also leads to questions about how to define the success of one. Melissa Marrero, managing partner of Milwaukee-based Health Exchange Resources, a company that helps employers evaluate private exchanges, agrees the definition of success is an unknown.

Guy Morrison, executive vice president and benefits practice leader for Marsh & McLennan Agency in Atlanta, adds that private exchanges have been successful thus far in addressing the No. 1 concern for clients: cost inflation. “From our perspective, [private exchanges] have solved a ton of administration issues for HR professionals and solved a lot of ACA reporting pain points,” he added.

But the definition of success also depends on how you define cost savings. “We like to look at gross cost discussion, not a net cost,” Morrison explained.


For the 2017 benefit plan year, a handful of Marsh & McLennan Agency clients have been looking into exchanges. Many of these clients were moving to benefit technology platforms, so Morrison explains they should also take advantage of the “efficiencies” a private exchange can provide.

“Over the years, we tr[ied] to educate our customers and say, ‘We are going to tap the equation, but you should take this platform,’” he said. “[Then], ACA reporting comes and everyone wakes up.”

“All of a sudden companies who had no interest in making a phone call say, ‘We talked about this thing,’” he added. “That is what we are seeing in terms of adoption. Organizations that do not have a platform in place or have legacy platforms say, ‘We need to make sure we have an ACA reporting tool that allows us to meet [compliance] requirements.’”

Register or login for access to this item and much more

All Employee Benefit News becomes archived within a week of it being published

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access