Though private benefits exchange adoption rates gained ground for the 2015 plan year, with both Mercer and Aon Hewitt recently announcing increases in the number of healthcare exchange clients, the results of adoption rates for last year and the coming year are likely to be less than originally predicted.
The slower-than-expected uptake by buyers is due, at least in part, to the fact that it can take a company up to two annual review cycles to understand the various exchange offerings well enough to make an informed decision. Moving to the private healthcare benefits exchange model is a high-dollar-value decision that can have dramatic positive or negative effects – on employer and employees. Even a one-to-two percent difference in healthcare costs can be a difference of millions of dollars.
“Moving to the private healthcare benefits exchange model is a high-dollar-value decision that can have dramatic positive or negative effects – on employer and employees.”
To complicate matters further, the consultants that companies have traditionally relied on for guidance on these kinds of decisions now provide the exact exchange products that are in question. Buyers are not surprisingly reluctant to rely on these consultants when they need, more than anything, impartial advice to help them explore the exchange market.
Companies need to fully assess the private exchange solution as a strategy for meeting their specific benefits goals and business objectives. They need a comprehensive evaluation of service provider offerings, including financial results, pricing, delivery, technology and contracting terms. They also need to know that the private exchange can deliver quality administrative support by fully understanding their administrative applications, processes and staffing.
A truly independent assessment can arm an employer with realistic financial projections based on an actuarially determined analysis of their current plans compared with potential exchange scenarios. By applying real data from its claims history and population to actuarial tables for two to three scenarios, an employer would have the hard numbers to validate the cost-savings potential and the ability to build a business case for moving forward – or for staying the course.
If the business case determines that an employer could see significant cost savings from moving to the private healthcare exchange, then that employer can move confidently toward launching a request for proposal (RFP). If the business case determines that the current plan is delivering a so-called “high performing plan,” then an employer would be saved the arduous task of going through the exchange RFP process.
Buyer acceptance of exchanges will most likely continue to increase once there is more history from early adopters – and once employers have access to a fully independent analysis and fact-based process to steer them through the decision.
ISG is fully independent of all exchange offerings and can provide the guidance and expert analysis needed to navigate this complex set of decisions. To learn more about our capabilities, please contact Don Biron or Debora Card.
About the authorDrawing on 25 years’ experience Don works with clients to clearly define appropriate benefits and healthcare exchange sourcing service delivery strategy, implement their sourcing decisions and develop effective relationships with internal or external service providers. His expertise includes assessment, business case development, service provider selection, and services implementation.
