Since the passage of the Affordable Care Act, interest in private healthcare exchanges has exploded, and so have their numbers. As of October 2014 there are at least 150 different private healthcare exchanges in the United States. The private healthcare exchange market is very complex and each exchange or marketplace is different. In fact, many employers remain largely unaware of the variety of solutions available today under the “private exchange” label. So, how do employers properly evaluate all these exchanges?
Private exchanges vary from the most basic level through to more complex differences. Does the exchange target Medicare retirees, non-Medicare retirees or active employees? Is the exchange single-carrier or multi carrier? What carriers and products are available? What decision support tools are available to help consumers make decisions?
Here at KTP, we have found that while these characteristics are important and worth evaluating, there are even more complex considerations employers need to address before signing onto an exchange. For example, how does the exchange get compensated? What does the ownership of the exchange look like? How does the exchange negotiate contracts with carriers?
Another set of questions employers should address involve the technology itself that powers the different exchanges. A recent article from Employee Benefit News, “Buyer Beware: Can Your Private Exchange Deliver on the Back-End?” raises important concerns regarding the back ends of the technology system. “Benefit exchanges are incredibly complex on the back end. There are medical, dental, life and disability insurance carriers. There are reimbursement account administrators. There are payroll and HRIS platforms. There are pharmacy benefit managers. There are wellness providers. That’s the part the employee never sees, but that exchange owners — corporate HR departments, and insurance brokers or carriers — will have to deal with every day.” When evaluating exchanges, employers need to consider more than just their employees.
With the market this fragmented it is inevitable that some players will get gobbled up in the consolidation. Others will simply fade to black. Will the exchange you choose be around for the long haul? Will it be acquired by a buyer whose long term strategy and commitment are contrary to your own?
When vetting and evaluating private exchanges, employers need to be sure to cover all of their bases. To properly evaluate all the players in the private healthcare exchange market, it is important to get an independent perspective and know the right questions to ask.
KTP Advisors is constantly performing extensive research to provide a completely unbiased and independent evaluation of the private healthcare exchanges and marketplaces that have emerged. KTP does not have their own exchange and is not affiliated with any.
For the full EBN article, please click here.