Shared with permission from MEDCITY News, by Dan Verel, 7/25/2015
While much attention has been heaped on the public health insurance exchanges over the year, private health insurance exchanges “are experiencing hyper-growth” and enrollment could exceed that of public exchanges by 2017, “if not sooner,” according to Accenture.
In a recent report, Accenture said employers, consumers and carriers alike are expressing enthusiasm for private exchanges, which are undergoing “an earlier-than-expected growth spurt.” More than 3 million individuals could enroll in health plans through private exchanges just during the 2014 benefit year, Accenture estimates.
MY EXPERIENCE: IBM was early in this trend, selecting Extend Health to offer Medicare-eligible retirees expanded new insurance options. Yvonne and I were able to pick from 37 different policies and for the first time select different plans to fit our unique needs, saving a lot of money for equal or better coverage in the process. We’re thrilled with that and that fact that all of our doctors were “in network.” Extend Health replaced IBM’s traditional group policies, and rather than the company paying the premiums out of my pension, they setup a Health Reimbursement Account. The HRA is a tax-free account that I can use each year to pay premiums and out-of-pocket health care costs, including deductible, co-pays and coinsurance.
But whether private exchanges can sustain the positive trajectory hinges upon a number of as yet unanswered questions, specifically: now that the first material open enrollment period has ended, have the promises been met?
Such promises include, for consumers: retail-like shopping across multiple channels; increased choice and flexibility for benefits; a diverse offering of products; and adequate support. For employers, potential benefits include reduced administrative burden, standardized products and greater control over costs.
There are potential “pain points,” according to the report, and those include primarily lagging “back-end” administration of benefits.
“Employer expectations, and corresponding service levels and capability maturities, will vary widely across exchange models,” the report says. “However, no matter how ‘premium’ or ‘simple’ the exchange, there are fundamentals that all private health insurance exchanges should consider as key factors to help sustain their growth.”
Employers will likely view private exchanges as an attractive option if they can be leveraged for recruitment purposes, versus the public exchanges under the ACA that are geared toward individuals who struggle to afford private insurance and who are not offered benefits through their jobs.
Larger companies in particular may see a private exchange as an attractive, simplified resource to direct employees if they have a variance of part-time and full-time and executive versus non-executive elements.
“Although exchanges are working hard to standardize product offerings, they should offer solutions to manage these complexities. These challenges are compounded by the introduction of new defined contribution strategies that may have a variety of permutations across these employee groupings,” the report says. (Scroll down to the bottom of the article to see illustrations from the report of simple systems and more complex ones).
Data management will also present a challenge to private exchanges, particularly if it means an employer is going to offer more plans than it used to. For instance, if an employer goes from offering three plans with one carrier to offering five or six plans under multiple carriers, plus dental or vision or life, things could get complicated.
“With such a large volume of information, issues arise around how to pass data back and forth across organizations, or how to handle exception processes and reconciliation. Exchange operators will be expected to address these increased complexities, often managed by benefits administrators today,” the report says.
Consumer experience will also greatly determine how successful private exchanges are.
According to an Accenture survey of 2,000 U.S. consumers, 87 percent identified “tools to help project my expenses and select coverage levels” as an important feature, with 58 percent identifying it as a very important or critical feature.
Key pieces of the consumer experience will include integrating with providers, product bundling and integrating healthcare savings and spending accounts, all of which will make it easier to manage, track and use, according to the report.