Alan Cohen, a benefits technology and private exchange pioneer, argues in a new book why it’s more important than ever to promote choice in the group health market.
“Employee Benefits and the New Health Care Landscape: How Private Exchanges Are Bringing Choice and Consumerism to America’s Workforce” (Pearson; $29.99) examines the role of online marketplaces in the U.S. within the broader context of employee benefits and insurance.
Cohen, head of product for Willis Towers Watson’s Exchange Solutions business segment, also analyzes how advances in consumer-centric models are revolutionizing the way employers recruit and retain talent. He co-founded Liazon, a leading private benefit exchange acquired in 2013 by Towers Watson before the Willis pairing.
Cohen cites “a proliferation of differences in health plan offerings” that will accelerate in the near future, predicting a new dimension of choice being added to traditional and consumer-directed health plans. He notes, for instance, that sometimes accountable care organizations form their own health plans amid a proliferation of new choices in the market, even from large national carriers such as UnitedHealthcare, Cigna, Aetna and Blue Cross launching alternative networks.
Another key trend Cohen has noticed is “a resurgence of primary care primacy” featuring fully integrated patient care coordination. A third factor driving choice, he says, is increasingly mainstream supplemental health offerings.
“We’re going to see some deep differentiation when it comes to provider choice and networks, and also access to that primary care model,” he predicts. “You can’t just have some really rich, expensive PPO and have the price go up and go up every year, and have the company not pay as much as they had in the past, because it will just get unbearable.”
The movement toward DC
The adoption of more high-deductible health plans tied to health savings accounts will help leverage the power of health benefits for employees, according to Cohen. In addition, he says greater movement toward a defined contribution approach will enable employers to absorb more predictable costs and offer greater price transparency.
Interest in private health insurance exchanges swelled about three years ago, but hasn’t met enrollment expectations that Cohen believes were unrealistic. “It takes a long time for things to change. There’s a lot of status quo bias,” he says, noting a “significant, steady increase every year” that’s evolutionary versus revolutionary. An Accenture report in 2014 boldly predicted that 40 million working Americans would sign up by 2018 when, in fact, the number is currently about eight million.
Still, Cohen notes that employee satisfaction with private exchanges has been between 80% and 90% over the past decade. “Some of our benefit advisers who are very involved and engaged are getting employee satisfaction numbers at 92% or higher,” he reports. “That’s stunning. That’s more than double typical employee satisfaction.”
A large regional adviser reported a 3% annual medical trend for a private exchange client with about 15,000 employee lives over five years. “It’s pretty close to wage inflation,” explains Cohen, adding that “it’s nonsense to compare healthcare inflation to the CPI, which is a purposely constructed basket of things that don’t inflate.”
In addition, nearly three-fourths of employees surveyed by Willis Towers Watson say they are more likely to stay with their employer because of the exchange offering. This finding shows the potential of this health benefit delivery model for burnishing recruitment and retention, Cohen suggests.
It behooves benefit brokers and advisers to consider these high marks when huddling with employer clients on health benefits design and delivery, according to Cohen. He says “commissions go up 20% to 30% when people use the exchange,” which is stockpiled with products that aren’t subject to the Affordable Care Act’s medical loss ratio.
More change in the health benefits marketplace is expected, regardless of what eventually happens with healthcare reform, which Cohen says has barely affected companies with more than 100 employees. He’s intrigued whether “the more fluid ability to sell [health insurance] across state lines,” a theme of Donald Trump’s presidential campaign, will target individual or group coverage, or both. If employer-provided coverage is included in the mix, then he’s sanguine about the possibility of more options for companies and choice for consumers.
“Ten years ago, my partners and I had a crazy idea that was simple, yet powerful: Let people choose the benefits they want rather than have their employer do it for them,” according to Cohen. “This book provides a rare glimpse into our early thinking and guiding principles that are still relevant today — perhaps even more so — in light of current efforts to get something done in legislative circles when it comes to the subject of health insurance and other benefits.”
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