Towers Watson has spent nearly a billion dollars of its own capital to build out its private exchange offering, OneExchange, through acquisitions. This includes their $215 million purchase of Liazon just over a year ago. Jim Foreman, Towers Watsons director of exchange solutions, shares how voluntary continues to grow in a private HIX marketplace and why more and more employers are expressing interest in the offerings.
What is the structure of your exchange? What makes it different?
Weve got all of the assets in one segment, in one company. We provide what we believe is a holistic solution for every population in what we are calling OneExchange regardless of where you enter the exchange. If you enter as a retiree, if you enter as an active participant under your employers program or you might enter in what we call the access environment, which gives you pre-65 part-time and COBRA coverage. Each of those three buckets we believe is a different offering than our competitors.
Were structuring it in a couple of ways. One is the continuity of coverage from new hire through retiree and really thinking in terms of managing the health care of our participants in their particular episodic areas of care.
In the active exchange, weve got four areas that we focus on in terms of managing that trend.
1) Network: We offer multiple plan design options;
2) Creating a very aggressive and leading-edge offer in the pharmacy area;
3) Developing some wellness initiatives both in terms of the carrot approach as well as the stick approach;
4) Finally, developing tools to bring in consumerism in a way that is really what we do for clients [who are] not in an exchange environment.
Most important is management of these programs is really focused on cost management. There are some upfront cost savings for certain employers, but a lot of it depends on what programs you implement with your populations. Our proposition is to manage trend over a long period of time to beat the normal CPI of health care increase. While it is the early days, we are seeing this relatively flat around 1.8% versus much higher trends with standalone plans. We believe the aggregation of all these will continue to allow us to leverage that scale in the health care environment.
How do you recruit clients?
The Towers Watson brand works across a variety of types of organizations. We dont have a specific industry focus, so we recruit our clients from our current client base and work with many Fortune 1000 companies for decades. We have a trusted adviser sort of prospective that weve gained. We bring this new idea, new concept out to our client base. Whether were consulting on health care, consulting on rewards, consulting on regular benefit programs in general or retirement programs. We have a breadth of client relationships that we are very focused on. From time to time, because this is a new concept, companies that dont do business with us ask us to provide a quote through an RFP.
One of the things is changing. Previously, we primarily worked with the head of HR and over time that started to morph to finance. For the first time, the CEO is taking a very active role in determining the long-term strategy of their respective companies health care. Not that the CEO wasnt concerned about health care and the cost. Now with the exchange concept, it is a broader solution for employers, because they are outsourcing many of those capabilities to firms like ours. Weve really seen the elevation within our clients around the C-suite involvement.
What is your relationship with brokers?
Through Liazon, and that is one of our subsidiary organizations, they work 100% exclusively with brokers. On the non-Liazon platform, we really focus on direct to employers but that is really in the large Fortune 1000 environment. We work with national brokers, regional brokers and local brokers to offer them the Liazon platform. In some cases, we provide private label offering for certain brokers and in other cases, they use the Bright Choices solution as it stands. Weve been very succesful and weve seen a very large increase year-over-year. Its an area that we believe will continue to be a huge part of the future for us.
How does 2015 open enrollment compare to 2014?
We are certainly seeing more enrollment than what weve seen last year and maybe more importantly we took some of the lessons we learned in last years enrollment. Weve enhanced the shopping experience and we took some consumer tools that we developed last year and made them much more efficient.
Where do you see private HIXs fitting in the health care game moving forward?
My sense is that this is an evolutionary process. Weve got the looming Cadillac excise tax out there and I think a number of employers have been on the edge kicking the tires around whether an exchange makes sense for them. I believe we will see much more growth in 2016 then we saw this year. Our pipeline for Jan. 1, 2016 has already started and at this time last year really didnt have any employer interest. They are starting earlier, which I view as a good sign. I believe that the health plans see this as a potential growth area for them both in terms of their focus on health care as well as the ancillary benefits.
We even offer, for some of our clients, pet insurance. Towers Watson for instance put in an information security option for people this year to buy. That portfolio will really continue to develop and evolve. Were watching things like ACOs from the sidelines to see if they might be a potential offering in the health care exchange of the future. This private market, the technology is there, the willingness from employers is there, the ability to pick and choose at the local market will continue to play a big role in health care. Health care is delivered locally; this gives the consumer a decision to find health care that is local for them.
Editors note: This story is the fourth in a series of one-on-one interviews with private exchange leaders and top decision-makers across the U.S. Know of an exchange expert who should be profiled? Email Brian.Kalish@sourcemedia.com.
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