Despite relatively flat growth in the last few years, the population using a private benefit exchange is expected to explode from 6 million in 2015 to 40 million by 2018, according to Accenture. Until 2018, that growth will be slow and methodical. Exchange leaders say it’s worth the wait.  

Fifteen years ago, employers weren’t quite ready for the technology, says Don Garlitz, senior vice president at exchange technology provider bswift. But in the last few years that has shifted and most everyone in benefits, including brokers, is seeking information about private exchanges.

“Three years ago, every broker wanted to know what private exchanges were and how it might affect their business,” says Ashok Subramanian, CEO of exchange technology provider Liazon. “Now the conversation is shifting to [be] more [about] detailed account planning for their clients. … There are brokers who have embraced private exchanges as a core part of their business strategy. Those brokers vary from large national to small regional and super regional.”

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However, the pace of change in employee benefits is not as rapid as in other industries, explains Subramanian, who co-founded Liazon in 2007.

“I think you need to have patience in an area like healthcare,” he explains. “This isn’t a mobile app to find something online. This is a serious topic. There is a natural and normal concern about changing things when it comes to employer benefit problems and that is [because] employers take the responsibility very seriously.”

Changing models

The industry as a whole needs to evolve quickly to adapt to new provider payment models, says bswift’s Garlitz, and employers need to embrace them aggressively in order to have the best opportunity for cost control. “We have a real problem in the healthcare system,” he says. “There is a certain amount of pain for everybody in healthcare today because of cost.”

Evolving away from the traditional fee-for-service model in employee benefits is part of the solution, Garlitz says. “It is our belief that an exchange would best serve the consumer if the consumer has access to lower-cost options, including accountable care organizations,” he explains. “You could have broader fee-for-service types of plans, too, but give consumers the choices they need to make the best decisions for their personal situations. A private exchange is well positioned to deliver this consumer choice.”

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A private exchange operator can handle plans with any payment model, Garlitz says, but the challenge is that most employers haven’t yet adopted these new provider payment models. “My optimism is that we are making huge strides in creating the kinds of solutions that will help individual consumers make the best choices for what plan they will be on,” he adds. “It really is taking the best of technology solutions and marrying those up with engaging consumers in a way the consumer wants to be engaged. Hopefully [that] helps bring us to an evolved and better healthcare system.”

All of this is part of the journey. "It really is understanding not only employer clients but people — employees, families and their needs. ... And identifying a strategy to meet the needs of those clients," says Sharon Cunninghis, leader of the Mercer Marketplace. "A constant pursuit of what are the new ways we can better meet those needs. Is isn't one and done. It is a journey. It is a very strategic journey."

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