Insights on the World of Private Healthcare Exchanges
Rhonda Marcucci, founder of Gruppo Marcucci (GPM), is a respected industry, observer, speaker and author of articles on topics pertaining to the HR and Benefits Administration technology and outsourcing industry. For up-to-the-minute insights from industry conferences, follow Rhonda onTwitter.
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Insights on the World of Private Healthcare Exchanges
Posted on 07/26/2014
The recent Private Healthcare Exchanges Conference held in Chicago drew several hundred participants, looking to learn more about all aspects of private healthcare exchanges and to connect with the key players in this rapidly growing new marketplace. While geared to employers, participants were roughly equally divided among employers, brokers and carriers/service providers, making for an engaging mix of stakeholders.
GruppoMarcucci consultants Rhonda Marcucci and Pam Gockerman attended and Rhonda moderated a panel on ancillary-only private exchanges. Following are some insights gleaned from the conference.
Building a Healthcare Strategy
As the industry works to define the role of private healthcare exchanges, it’s vital for healthcare providers, consultants and employers to consider holistic approaches to building exchanges that extend beyond the realm of medical insurance. Core aspects of employer benefits programs such as consumer-directed benefits, should increase efficiency, reduce cost and be a vital component of an exchange strategy.
Key insights related to strategy:
Don’t throw the baby out with the bath water; take a hard look at current strategy and how to bridge to a new strategy, given the new environment.
History repeats itself; we’re back to the days of cafeteria plans but with technology.
Regardless of the recent mandate delay, employers should get on board now to be ahead of the game.
Private exchanges are a “progressive experiment.”
It’s important to know where the buck stops with exchange provider contracts.
Recommendation engines should be evaluated to determine if they steer for preference of the exchange sponsor.
Human priorities are curious; many value daily Starbucks coffee habit more than the cost of their healthcare.
There are flexible options to provide unique populations within a company, e.g., independent contractors, access to a private exchange with individual products with no contribution.
Ready to Launch: A Historical Viewpoint and Look to the Future
Private health insurance exchanges have exploded onto the employer-based health benefits landscape. While all exchanges offer the prospect of reduced administrative burden, cost containment and increased employee choice, no two solutions looks alike. Employers must be thorough in their assessment. The coming online of public (state) exchanges in 2014 will add to the diversity of exchange offerings available to employers.
Key insights related to evolution of exchanges and what’s ahead:
When policies/laws change, look for the markets to change.
Public policy enables one deal to be better than another, i.e., group health plans vs. individual health plans.
Accountable Care Organizations (ACOs) will get providers to streamline care – higher quality at a lower cost.
ACOs will participate on private exchanges because it’s easier for an employer to buy through a private exchange than directly through the ACO.
Major difference between post-65 Medicare exchanges and pre-65 group private exchanges is Medicare designs the plans and the carriers must conform to the criteria while private group exchanges may force the carriers to conform to criteria but they may not.
Tax reform (deduction of employer sponsored healthcare) will affect private exchanges.
Optimizing Employee Communications
With the introduction of private health care exchanges, employers must consider the implications for their benefits communications strategies. While exchanges can offer employees more choice and control over benefit options, employees will require information and decision-support tools to help them make the right choices.
Key insights related to employee communication strategies:
Employees are no longer just employees; they are consumers.
In an exchange environment “passive enrollment” is going the way of the dinosaur.
Communications must manage the transition to a “shopping experience.”
Emphasize the “what’s in it for me” element.
Checklists will be useful tools along with “who to call” now that there are more players in the mix.
The Stakeholder Dialogue
The three key stakeholders—employers, broker/consultants, and insurers—have varying views on exchanges, including how the exchange market is developing, where it’s headed, how quickly it’s likely to emerge, and the demand and urgency around private exchanges.
Key insights related to stakeholder views:
Aetna is introducing ACOs in test markets; carriers, in general, are taking a curious and cautious approach.
ACOs with narrow networks are going to take off over time as a means to help employers manage wellness initiatives and costs.
Employer demand is currently limited. Demand is being inflated by brokers/consultants looking to differentiate themselves in the market.
Different market segments will have access to different solutions.
Jumbo clients are feeling no urgency to move to a private exchange.
Mult-icarrier exchanges viewed as risky; carriers not interested in “slice business,” which typically works well only in large markets.
Exchanges are quickly developing into platforms for access to ancillary/voluntary benefits (non-medical) products to fill in coverage gaps, as well as retirement/financial products. There’s no need to assume it’s a one-size-fits-all marketplace, and many employers are interested in ancillary-only exchanges for specific employee populations, including pre- and post-65.
Key insights related to ancillary-only exchanges.
The advent of the Consumer Protection Financial Bureau—while not overseeing insurance products yet—is likely to soon do so, resulting in higher standards for consumer protection for insurance products.
There is a growing demand for supplemental insurance as consumers take more individual responsibility for financial protection.
Ancillary exchanges can deliver products to employee categories that may otherwise not have them available, e.g., part-time or non-benefit eligible employees, and is an alternative for employers that are sending employees who qualify for a subsidy to a public exchange.
Brokers are seeing population segments (in large and small companies) that will want an “ancillary/retirement centric” benefit packages vs. a “medical centric” package.
There is increased competition for traditional non-medical carriers from health carriers that are bundling non-medical products.
Products are being packaged for “direct to consumer” experience; there’s potential for some bundling and discounting and decision support tools will drive this.
The population (size and demographics) will influence the product offerings.
Defined Contribution in a Post-PPACA World
As employers look to fix their health care contribution obligation while continuing to offer valuable coverage to employees, the compliance aspects (current and future) of private exchange arrangements must be considered to fully realize the benefits of a defined contribution approach.
Key insights related to DC:
Mini-med has gone away; it will no longer be approved.
Multi-state employers using private exchanges will need to consider state regulations.
If private exchanges move money, they fall under the myriad of state third-party administrators (TPA) rules and regulations.
Private Exchange Case Studies
Two cases studies were presented around pioneering clients of Mercer and Aon who have already begun providing benefits via an exchange.
Case study insights include:
Roughly half of employers are interested in moving to a defined contribution strategy.
Successful plans are standard, attractive and transparent.
Exchanges may not entertain customization of plans.
Moving from self-insured to fully-insured may save money.
Carrier competition may decrease cost and increase quality.
To discuss how GruppoMarcucci may assist you in responding to the challenges and opportunities related to private exchanges, contact Rhonda at Rhonda@gruppomarcucci-usa.com.
Gruppo Marcucci (GPM), a division of Gallagher Benefit Services, Inc., provides outsourcing intelligence and associated consulting to stakeholders in the Benefits and HR Technology & Outsourcing industry. Our in-depth understanding of the service provider market and our vast experience sourcing and implementing solutions is key to our clients achieving full operational success.
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