ADP promises to work with brokers on new private exchange

Human capital management giant ADP on Thursday launched a private health care exchange that will serve as a one-stop shop for employees provided benefits through their employer as well as those who must shop on the public exchange.

In cooperation with brokerage USI and health tech company GoHealth, the ADP exchange, which is targeting employers with more than 1,000 lives, will be housed within ADP’s platform, but open to employers who use any broker.

Currently, ADP helps employees determine who within an employer’s population is eligible for employer-provided benefits and who must purchase on the public exchange, such as part-timers. If an employer uses the ADP exchange, the shopping experience will be the same for both populations and housed within the same system through which an employee manages payroll and time management.

Also see: Why Walgreens moved to a private exchange

ADP launched the exchange in response to demand from clients, Gerry Leonard, president of ADP Benefit Services, says. “Everyone kept asking, ‘Where is your exchange, where is your exchange?,’” he says. “We kept asking our clients, ‘What are you trying to do?’ What they wanted to do with their benefits strategy was say, ‘We are not ready to make a  wholesale switch to an exchange at this point, but we would like to have an option to offer defined contribution and maybe get to the point where we offer a flat dollar amount and let [employees] choose.”

When talking with clients, many have been asking about benefits and what other employers are doing, including if they are slashing or dropping their plans. “We say, ‘Absolutely not, most [employers] are starting to leverage benefits to attract and retain employees,’” Leonard says.

By simplifying the process of buying health insurance and making it easier by giving choices right through an employer portal, this exchange might be a good thing, says Brian Marcotte, CEO of the National Business Group on Health, a Washington, D.C.-based coalition of large employers.

“The benefit of what they are doing is comply with the part-time workforce to facilitate the process of access to” a public exchange, he says. “[That] will be viewed as a key benefit for those part-timers who are not eligible for coverage from an employer.”

Despite that, there is still not much uptick in private exchanges by large employers, as most of those with 10,000-plus employees are taking a wait-and-see approach, Marcotte says. “While I do think private exchanges can offer choice and [help with] compliance, [large employers] don’t have confidence at this point that a private exchange can control costs better than they can on their own today.”

Broker’s role in ADP exchange

In this exchange, ADP will not serve as a broker and “will not compete with brokers,” ADP’s Leonard says. “An employer is free to stay with their current broker or use any exchange within the market.”

“We are not exclusive to USI. If a client says, ‘I am married to a local broker,’ we will say, ‘BYOB, bring your own broker, to the party,’” he adds. “We absolutely expect to enable any broker who has a great relationship with their client, we will tell them to bring their broker to our exchange.”

Also see: Why resellers may have to turn away some future exchange business

Leonard says brokers may bring ADP into a conversation and recommend their solution, but not exclusively. And if a client asks ADP for a broker recommendation, they will recommend USI.

Leonard says many brokers are local and ADP wants to encourage those brokers to look at this exchange and say, “We’ve got something unique, an end-to-end solution for your client that does not intermediate you,” he says. “A lot of exchanges in the market today use a brokerage firm and it’s, ‘My way or the highway,’ but we are 100% flexible in the way we will ask a client what broker do you want to bring to this arrangement.”

“We will work with every single broker in the market,” he adds.

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