Private exchanges are about employers getting out of the business of employees’ health plan selections, which ultimately is a personal choice, said Alan Cohen, chief strategy officer and co-founder of Liazon, which was acquired last November by Towers Watson, during a panel discussion sponsored by SunLife Financial, presented live in South Florida and by webinar.
“Employers had control over benefits because they were forced to have control,” Cohen said. “[A private] exchange strategy allows the employer to step back and be responsible for one important thing — which is how much money they want to allocate.”
In June 2013, an Accenture study estimated that one-out-of-five employees will purchase their health benefits from an exchange in the next three years and that by2018private exchange enrollment will surpass participation in state and federally funded public exchanges.
Yet, a private exchange is not for everyone, said Shannon Alfonso, a broker and president of Seitlin, a Marsh and McLennan agency. She said that picking health care is still a complicated process and without employer help, employees are liable to make bad choices.
“You have to consider that,” she said. “I don’t believe employers want to step out of [providing benefits], it is used to attract and retain top talent.”
Rob Hankins, vice president of private exchanges at Willis’ Human Capital Practice, agreed with Alfonso but added a private exchange is something valuable and a tool that employers and clients might be interested in depending on what their specific situation is.
“It encourages consumerism, so if you’re an employer that doesn’t have engaged people, it may not be the best tool for your people to use,” he said. “[Employers] need to know where they are as a company providing benefits.”
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A good private exchange requires three key components, said Mike McDonald, principal at Mercer Health and Benefits. It needs to have excellent decision support tools, should be an end-to-end solution for the employer to help with administrative burdens and it has to drive cost savings.
Brokers
Questions also linger about a broker’s role in private exchanges and the fear that private exchanges are diminishing the role of brokers. However, Cohen says the opposite is true and that their involvement with private exchanges will distinguish great brokers from good ones.
He explained it’s not complicated to go out and get insurance quotes and see which plans are cheaper, but it is complicated to give advice about private exchanges as the discussion hinges not on what benefits to offer but rather on how much money employers should allocate and which private exchange might best suit their needs.
