Private benefit exchanges

After two years of health plan enrollments in the emerging online marketplace, it’s possible that public and private exchanges are finally converging.

For many benefits professionals, the different private exchange offerings and the varied value propositions they present can be overwhelming. So let’s take a step back and examine the issues one at a time.

Employers using Aon Hewitt’s multi-carrier fully-insured private health care exchange experienced average annual health care cost savings more than 4% lower than industry projections.

A 9-million person market is a powerful one to tap. Blue Cross Blue Shield Association, which represents Blues plans across the country, is the latest to launch a retiree private HIX, coming this summer.

Most private health care exchanges are geared toward active employees. But Tampa, Fla.-based Brown Insurance Group has an eye on part-timers who may have lost coverage or who never had access to group plans. Eric Brown, principal, explains how his private exchange allows employers nationwide to provide coverage to such employees through an exchange-like environment. Brown Insurance also assists with Healthcare.gov enrollment.

Health insurance plans purchased through public health care exchanges often generate levels of member satisfaction higher than plans obtained through employers, according to a J.D. Power study.

There is a unique opportunity in retiree health benefits, one that brings a potential windfall for advisers willing to embrace the market.

There may be a convergence of public and private exchanges and if that happens carriers need to adopt a more holistic approach and consider multiple retail channels to distribute their products as part of a multi-carrier approach or alliances such as those seen within the CO-OP market.

Although interest in private exchanges is growing slowly among large employers, many still have reservations about whether exchanges will offer more value than the plans they already offer. So, how does a large employer determine if a private exchange is the right move?

Seattle-based Array Health says it has formed a partnership with HealthEquity providing personal health accounts on Array’s e-commerce platform – Array Spectrum.

Time was when the word marketplace conjured up images of village locals peddling their wares to eager residents, or tourists looking to sample native foods or purchase artistic creations from an open-air market nestled within a quaint town.

Enrollment in private health care exchanges hit 6 million for the 2015 plan year, according to Accenture — doubling the 3 million figure from 2014. Most of the growth is in the mid-market segment.

Voluntary business is a well-known tool for brokers to increase their revenue while offering new products. But many employers are hesitant to add these products because of additional administrative burdens they can require. Enter the private health care exchange, says Carlos Ferrera, COO of Solstice Benefits and the Solstice Marketplace. With an exchange, the burden is gone, he says.

Although most employers who move to private exchanges are seeing some cost savings below trend in their initial years, that is not sustainable over time, says Rob Harkins, practice leader, private exchanges at Willis Group. For Willis, the exchange is not designed to be a long-term money-saving product on its own, but rather part of a larger program for its clients to manage health and wellbeing.

Worksite clinics and private exchanges might appear to be mutually exclusive approaches to rising cost pressures, yet they can be integrated to achieve the same goal – improved health outcomes and lower health care cost trend.

Starwood Hotels & Resorts Worldwide is the latest big-name company to move its active employee base to a private exchange, joining other brand-name companies such as Time, Inc., Sears, Darden Restaurants and Walgreens.

As many as 90,000 Sears employees are finding it easier to shop for health care, are savvier about their coverage choices and finally understand the meaning of value since the 129-year-old retailer switched to a private health insurance exchange three years ago.

Commentary: Three common employer concerns about exchanges and how to address them.

Despite predictions that private exchange enrollment will hit 30 million in 2017, employers remain cautious about them, including those early adopters who say they had little choice but to move to one.

Rather than drop benefits in the Americas, which Hilton says would hurt not only its employees but hotel guests too, the company decided to move to a private exchange. During that process, one of the biggest critics of the move was the company’s vice president of benefits.