Private benefit exchanges

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.

Private exchanges present an opportunity to engage employees in their health plans year-round, not just during open enrollment.

Industry analysts praise one-stop shopping tools as a positive reason why many employers are moving to private exchanges. At Xerox’s Buck Consultants, 100% of employees enrolling through the company’s exchange engaged with its technology — and made an average of 11.5 return visits, says Sherri Brockhorst, leader of the RightOpt exchange at Buck.

Embracing private exchange solutions is, some say, imperative for brokers who want to survive in the industry, yet many remain confused about just how to do so.

Five years down the road, the insurance broker’s role in health insurance may be diminished, largely due to exchanges, consultants say. The role of the broker will change greatly in the process, they say, but in the near term it is a mixed story.

Private exchange technology platforms are the cornerstone of the new benefits administration market.

As many brokerages offer a private exchange to their clients, carriers who run their own are working extra hard to educate customers about their offerings, says Lisa Feddema, director, exchange management, Health Care Service Corp.

Another bullish forecast about private HIX growth estimates that the roughly 2.5 million current enrollees (excluding retirees) could triple in the coming year.

With the news of the breach of security at Anthem health plans, many employers have been wondering whether their employees are affected and how they should respond.

For some employers the move to a private exchange is as much about the role of benefits as an attraction and retention strategy as it is about saving money over the long term.

The distribution model for employee benefits is changing, and adapting to the rapidly developing landscape presents new questions and challenges for all players.