I participated in the first annual Private Health Insurance Exchange Congress organized by Global Media Dynamics in Las Vegas this past week. In attendance were executives from health plans, employers, employee benefits consulting companies, and private exchange technology companies. While there was a lot of interesting discussion on the rapidly evolving private exchange market and sharing of best practices, there were three main reoccurring themes.
First, user experience is key to the success of a private exchange. And the backbone of a good consumer experience is a robust decision support tool – the kind that quietly works behind the scenes to make sure consumers and their families get the coverage that makes the most sense for them. As Barry Mason, VP of Global Healthcare Payers IBM, noted in his panel, decision support tools actually need to narrow down options to the best 3-4 choices in order to be effective. He added that IBM has found comparison and rules-based tools don’t work well and don’t provide consumers with the support they need.
Second, the outlook for private exchanges continues to be bright. Rich Birnhanzel, Managing Director for Accenture Health Administration Services and author of the most recent report on the future of the private exchange market, predicted 9 million will be on private exchanges in 2015. He said that initial data from fall enrollment shows clear visibility into 6 million of the 9 million forecast. In short, Accenture is predicting 2015 enrollment in private exchanges will be three times that of the 2014 numbers. In line with the Accenture predictions, Eric Grossman, Senior Partner at Mercer, said Mercer has 2.5 million people participating on its private exchange, a 500 percent growth from last year.
Third, the data shows that private exchanges are helping consumers and employers save money. As Mercer’s Eric Grossman stated, $1 out of every $10 of compensation is spent on healthcare. Or put a different way, healthcare spending represented half of company profit margins last year. It therefore stands to reason that employers are interested in right-sizing benefits through the use of a private exchange. Jim Levine, Director, Compensation & Benefits at Church and Dwight (the Arm & Hammer consumer brand) reported that total healthcare expenses (employer + employee) declined by 11 percent when they moved to a private exchange. Karen Frost, Vice President, Health Solutions and Strategies at Aon Hewitt, said they expect healthcare costs to increase across the board, but the rate of increase for on-exchange healthcare expenses (5.3 percent) is lower than the rate of increase for off-exchange expenses (6.5-8 percent).
These data points, while not surprising, do align with what we are seeing in the private exchange market. We’re entering a new era in healthcare, one where the consumer experience plays an increasingly important role. It’s time that everyone – carriers, employers and especially consumers – begins to take healthcare personally. What does “taking it personally” mean to you and your organization?