Deloitte Consulting, William Blair & Company and Aite Group recently published reports on private health insurance exchanges, all of which point to steady and solid growth of exchange enrollment. In their analysis of the Deloitte Center for Health Solutions 2015 Survey of U.S. Employers, Bill Copeland and Paul Lambdin conclude that the “outlook is good” for private exchanges. Adam Klauber, the author of the William Blair report, remarks that private exchanges have become an “established and popularized solution for active and retired lives alike” and predicts that 15 million people will enroll in private exchanges by 2016, even higher than the 12 million forecasted by Accenture. Aite Group’s Mike Trilli projects private health insurance exchange enrollment to “increase at a compound annual growth rate of 41 percent through 2020.” The recently released 42 percent year-over-year growth in enrollment numbers by Mercer Marketplace further underline this trend.
Deloitte compares and contrasts the views of those employers who are already using an insurer’s private exchange to manage their insurance process for employees (adopters) and those who haven’t (non-adopters). According to their survey, 30 percent of non-adopters say they are interested in moving to private exchanges and the majority of those interested (62 percent) say they are likely to move in the next one-to-two years. Among the non-adopters, there is a strong preference – almost three in four employers – for insurance insurer-led exchanges, as opposed to multi-carrier exchanges.
Almost all employers in the Deloitte survey agreed to some extent that private exchanges control employer health care costs. Similarly, more than half of the insurers who participated in the 2015 Health Check survey, also experienced administrative cost reductions after implementing a private exchange.
According to Deloitte, the employers who have adopted private exchanges are now hooked and have become “converts.” Only eight percent of employers who have implemented a private exchange said they were not satisfied with their exchange. High satisfaction levels among adopters may be one of the reasons that non-adopters are considering private exchanges in the next few years.
The William Blair report focuses primarily on the private exchange market size and predicts an increase in market penetration from five percent today to 15-to-20 percent in the next four years.
While the report is optimistic for future growth of private exchanges, it cautions that “2015 is not expected to be a break out year.” William Blair believes that the groundwork laid in 2015, in particular, in gaining acceptance from insurance brokers, will bear fruit in 2016 and beyond. Similiarly, Aite Group’s report “U.S. Private Exchanges: Ready for Liftoff” talks about the role brokers are playing in increasing enrollment through private exchanges.
We believe private health insurance exchanges will one day become as commonplace as online banking or online investing. With all the discussion of personalization these days, shouldn’t health insurance also be tailored to specific needs and preferences? We are excited to see market acceptance of the technology platforms that will make buying and managing health insurance a better experience than it is today for consumers, employers and insurers alike.
