Private exchanges win converts but still face resistance
No longer merely an annual enrollment tool, today’s private health insurance exchanges can serve as the platform for all of an employer’s health benefit strategies.
The great benefit of a private exchange is that it has the potential to reduce benefit costs, while streamlining administration and more effectively engaging employees. Along with a broad selection of health plans, PBMs, delivery systems, wellness programs, transparency services, voluntary benefit options and consulting services, exchanges are now able to support employees year-round in their efforts to stay healthy and to effectively navigate the health care system.
At present, employers have a growing market of over 150 exchange-related organizations from which to choose. But, while enrollment in private exchanges is growing, this only represents about 6% of employers, according to a 2015 Private Exchange Evaluation Collaborative (PEEC) survey. Although continued growth is expected—especially in the mid-market sector—large employers still question the value of an exchange and have refrained from contracting with them. Their resistance is further fueled by their reluctance to surrender control and move from a self-insured model to fully insured status.
Thumbs up from early adopters
Yet early adopter employers have found that exchanges provide them with greater market competiveness, consistent plan design, comprehensive and targeted communication strategies and better rates, due to the greater leverage that comes from being part of a larger group.
In short, private exchanges offer employers a more efficient provider delivery vehicle.
"At present, employers have a growing market of over 150 exchange-related organizations from which to choose."
Those who have contracted with exchanges indicate a key element of for success is conducting face-to-face conversations with employees to help them better understand the changes the company was making and why. They found value in creating a lot of “buzz” about the new benefit platform and how it helps employees become better consumers of health care.
Early adopters also suggest the following:
To communicate the benefits of an exchange and its workings, rely on supervisors and others beyond the HR staff. All concerned should to be able to answer basic questions about the exchange and its operation. It’s important to be as transparent as possible about why the employer is adopting the new benefits platform.
Invite the carriers and other vendors who will be contributing to the exchange to visit the company so that employees can speak with them directly.
Don’t underestimate how attached your employees may be to the old way of obtaining their benefits. Provide education and tools that will show them how the new platform allows them to maximize their benefit dollars.
The move to exchanges is analogous to the earlier move from pensions to 401(k)s. During that shift, employers contracted with financial vendors to offer employees a variety of options that afforded them the flexibility of investing their retirement dollars as they saw fit. The same vendors assumed responsibility for administering those plans and communicating with the employees, freeing the employer from having to do so.
Yet, when it comes to exchanges, many employers remain in wait-and see mode, still uncertain as to how a private exchange differs from a benefit administration tool. To get them past this mindset, exchanges will need to do a better job of communicating their value. This includes highlighting potential services that go beyond administrative support and enable the employer to become more of a facilitator. In other words, they need to clarify how moving to an exchange will save the employer time and money, while improving the employee experience.