The latest insurer to follow a market for employer defined contribution plans, Blue Cross and Blue Shield of Kansas City is creating a health insurance exchange for its large group customers with the help of the tech firm Benefitfocus.
"Demand for defined contribution benefits is really taking off, and we only expect that trend to accelerate in the future," Jason Grau, Blue KC's VP of enterprise strategy and business integration, said. Employers are looking for valuable benfits, a variety of choices and cost predictibility, Grau said.
[See also: Tennessee Medicaid HIX sharing aims to reduce 'churn']
The growth of private HIXs is following the rise of consumer driven health plans and more interest in defined contribution plans, while web-based platforms with an Amazon.com-like consumer experience are more affordable than ever.
"The emergence of private exchanges turns the world of benefits into an e-commerce market, transforming the way employers and individuals select plan options," Shawn Jenkins, Benefitfocus CEO, said in a press release.
Benefitfocus has offices in South Carolina and Oklahoma, and its cloud-based platform is used in various industries for sales, HR and billing.
With about 1 million members, Blue Cross and Blue Shield of Kansas City is the largest not-for-profit insurer in Missouri and also has large market shares in northwestern parts of the state.
As health insurers prepare for state-based exchanges, more and more private HIXs are opening and helping usher in retail insurance markets.
"People are much more comfortable with technology and shopping online," Blue KC's Grau said. "It will not only be a better shopping experience, but they will feel more empowered and be more satisfied with the benefits they have chosen."
Earlier this year, Blue Cross and Blue Shield of Kansas City formed a shared services company offering web-based administrative software geared towards exchange markets, in partnership with Blue Cross and Blue Shield of North Carolina.
The growth of regional and national private HIXs comes amid a confluence of market trends driven by the ACA, employers and consumer preferences, and just as state-based exchanges are being implemented. Somewhat similar to Amazon.com's and eBay.com's disruption of retail commerce, HIXs are forcing insurers, consultants, HR managers and brokers to adapt or lose business.
Aon Hewitt, the global human resources consulting firm, recently unveiled a corporate exchange with 9 national and regional insurers offering five plans, from efficiency models to so-called Cadillac-like plans.
Retail exchanges selling small business plans are also sprouting up. In Illinois, home to some 280,000 companies, "the size of the market is vast, " John DiVito, president of Flexible Benefit Service Corporation, said. The Chicago-based company recently unveiled a HIX selling individual and family plans to employees on defined-contribution plans. Because of the Affordable Care Act, market-pressure on prices and internet commerce, DiVito thinks health insurance is starting to have a "wide array of distribution sources."