5 Recommendations for Private Exchange Stakeholders
More than 50 percent of commercial insurer and third-party administrator (TPA) respondents indicate their organization is currently participating or planning to participate in a multi-carrier exchange, versus 20 percent in a single-carrier exchange.
Preference toward multi-carrier exchanges is also highlighted by the fact that 70 percent of respondents have no plans to participate in a single-carrier exchange; that number is 30 percent for multi-carrier exchanges.
Forty-seven percent of respondents indicate private exchanges will be a game-changing retail acquisition channel for insurers by 2015 and 40 percent sometime after 2015. No respondents believe it will never happen. Furthermore, more than 65 percent of commercial insurers and TPAs participating in a private exchange over the next two years attest joining these models is strategically integrated into their consumer driven health strategy versus 15 percent of firms who disagreed.
Given this importance, Aite shares the following recommendations:
Increasing employer understanding is crucial, according to the report, is the biggest short-term barrier to success. Key communication areas include defined contribution, private exchange group models, and the pros and cons of public versus private options. Additional tools such as cost benefit calculators will stand out in the early stages.
Stakeholders should not assume the old way of doing things is the long-term answer. Payroll deductions are critical, yet payment capabilities will need to be advanced to support a dynamic retail environment.
Insurers need to be ready when multi-carrier exchanges become mainstream, even taking a page out of the auto insurance playbook (e.g., Progressive), launching campaigns focused on consumer brand recognition and keeping an eye on Highmarks retail store pilots.
This is especially true as HSAs become a leading product offer, and the opportunity to sell voluntary benefit products becomes lucrative to offset declining FSA sales.
Benefits remain a key perk to attract and retain top talent, and the lure of exchange group markets, defined contribution and high-deductible plans present a luring mix to meet compliance, reduce total cost of ownership and receive tax benefits while continuing to offer competitive benefits packages.