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Employers are looking to change the dynamic of benefit administration
By 2017, approximately one in five Americans will purchase insurance through exchanges-primarily private rather than public-based on a consumer survey and market analysis by Accenture. The firm projects that more than one in four employers are considering moving to a private exchange in the next three to five years.
Rich Birhanzel, managing director of Accenture Health Administration Services, says affordability of healthcare for employers and consumers’ desire for a retail-like experience when shopping for insurance, similar to how they buy electronics and other goods online, are two reasons driving the change.
“Employers are looking at private exchanges as an opportunity to change the way they contribute to benefits and a means of having employees pay for and fund what they need, whether it’s health, vision, dental or even life insurance,” Birhanzel says.
What private exchanges need in order to grow, he says, is outreach by benefits consultants and insurers who offer these products. There is latent demand and an opportunity to grow quickly.
Birhanzel says private insurers have taken different strategies in approaching the private exchange market, based on their size and scope. Some offer local exchanges because they have employer groups in one geographic area. Regional and national organizations are more inclined to participate in an array of exchanges offered by benefits consultants, providing more choice to employees.
Health plans that offer private exchanges have the potential to not only maintain the same membership base but to sell more products to those customers, such as auto and pet insurance.
“The carrier, over time, can have a bigger relationship with the member,” he says.
Health packages in private insurance exchanges must be compliant with the Patient Protection and Affordable Care Act, but due to the variety of offerings, employees get to choose among several compliant packages, he explains.
With so many choices to review and decisions to make, consumers who are most educated about these options will benefit the most.
“They have to understand the implications of the choices they are making, choosing a bit more in one area or taking on more deductible or co-pays in another,” he says.
The leading exchanges are investing in online decision support such as wizards, chat functions and call centers to help consumers tailor their benefits packages. Ideally, though, they have helped people understand their choices before they go to the website portal to select their insurance.
Some enrollees-particularly retirees less comfortable online-will want to enroll by phone, he says.
With open enrollment this fall, Birhanzel expects to see “wave one” of products that will evolve as the exchanges mature and eventually include disability, life and long-term care insurance, perhaps even some durable goods.
He projects that smaller employers, which are most heavily burdened by the healthcare affordability issue, will be the first to move to exchanges while larger employers might find it easiest to first move their group retirees into the exchange world.
“The growth in the largest employers is going to be modest, but it’s material because it’s so much membership,” Birhanzel says. “We’re probably going to see that, once a few of these move and have success, it’s going to be a more comfortable thing for others to move.”
Birhanzel says to watch for data from benefits consultants after fall’s enrollment period, when they should have information on a scale that is meaningful, perhaps a few million enrollees.