A thorough strategy should consider populations and HR service delivery implications
Many organizations are considering or have adopted a private insurance exchange (PIX) strategy. According to a 2015 Deloitte Center for Health Solutions survey, employers that have adopted private insurance exchanges (online marketplaces where participants can select health insurance) are positive about their choice. The majority of these adopters believe it simplifies their role, makes it easier to offer a defined contribution approach, and improves access to broader physician/hospital networks.
About a third of respondents (30 percent) who haven’t adopted a private exchange say they are interested in moving to one, with the majority of this group (62 percent) anticipating a move within one to two years. If your organization is among those contemplating the adoption of a private exchange strategy—or if you have one already and are looking to expand it—a thoughtful, holistic approach that considers the many implications and complexities will go a long way toward achieving positive outcomes for you and your participants.
Important considerations: populations, exchange models, and service delivery implications
In addition to common considerations such as cost, benefit plan choice, and compliance, a holistic approach to a private exchange strategy should address the interplay among populations, exchange models, and HR and benefits service delivery.
Private Insurance Exchange Models and Populations
Source: Deloitte Consulting LLP
Two key choices: best-of-breed vs. single provider
An often overlooked consideration is whether to contract with a single exchange provider for all populations or opt for “best-of-breed” exchange providers for specific population segments. Either choice comes with implications for the participant experience and service delivery.
Choosing a single exchange provider with capabilities across all populations and models can streamline service delivery in terms of communication and limiting handoffs between parties during transitions due to status changes or milestones (e.g., retirement, Medicare eligibility, part-time to full-time, etc.). However, a single provider’s exchange solutions may not be an ideal fit for all of your populations. For example, a single provider may have a strong Active Employee/Group Coverage Private Exchange but less experience with its Retiree/Medicare Exchange.
A best-of-breed approach may better serve each unique population’s needs, capitalize on exchange provider strengths, and provide for a positive participant experience. However, it does bring some challenges—most notably, a complicated benefits service delivery model. Having multiple providers involved in aspects of service to each population requires careful service delivery integration, communication, and coordination. To avoid unforeseen service delivery challenges, a best-of-breed strategy should be pursued by choice, through a well-planned population and private health care exchange strategy, not by chance as you migrate populations to exchanges over time.
Think it through
Surveyed employers believe that private exchanges provide value along several key dimensions: they are a vehicle to help improve employee satisfaction; they help employers comply with ACA requirements, and they simplify the employer’s role in benefit administration. We believe that realizing these and other potential benefits of private exchanges depends on careful consideration of several factors and, most importantly, how those factors interrelate.
Consider questions like these:
While exchange providers often come to the table with value propositions and business cases for their particular offerings, they aren’t necessarily equipped to help you take an independent and holistic view of your needs. A private health care exchange strategy should include broad analysis of the potential costs, benefits, and impacts—including your populations and implications on near- and long-term HR and benefits service delivery—in order to make informed decisions based on the needs of your organization and the populations you serve. Careful planning and a holistic approach can help avoid potential pitfalls and equip your organization to better meet employer and participant needs.