Insurers trying to ride the wave of private exchanges need to be careful not to get swept up or knocked overboard amid varying business models and high customer expectations.
Private health insurance exchanges are experiencing what analysts at the consulting firm Accenture are calling "hypergrowth." By some estimates, as many as 3 million Americans enrolled in plans through private exchanges this year, and based on employer surveys, enrollment could mirror public exchanges by 2015 and exceed 10 million.
Many insurers have little choice but to participate in private exchanges, lest their group accounts start diminishing. But the rise of private exchanges has also meant that retail insurance is being thrust upon the industry, challenging companies to adopt new businesses processes, marketing and technologies.
Not getting private exchanges right in the short term, argues a new Accenture report, could vex future prospects -- because employees using private exchanges and the companies paying for them have high expectations.
For consumers in private exchanges -- many of them employees coming from one-size fits all group plans -- private exchanges should have at least three features, according to Accenture: a simple, retail-like shopping experience, more choices and benefit-levels, and decision support tools.
The promises insurers have to keep for employers are just as important: reduced administrative burden, standardized products and "greater control over costs" -- which ultimately is envisioned as lower overall costs. Some insurers are selling in multi-carrier private exchanges, while others are trying to pioneer a single-carrier HIX, notably several large Blues plans, like WellPoint, HCSC and Blue Cross and Blue Shield of North Carolina and Cigna.
In either model, private exchanges can pose new administrative and technology challenges on the front and back ends, according to Accenture.
On the back end, issues that deserve focus include consolidated billing, integrated remittance and reconciliation, customized payroll integration for employers, and automation of processes in general.
"Exchanges that do not streamline and automate enrollment and eligibility processing for their employer partners will likely fail to deliver on a core promise of reduced administrative burden," Accenture analysts argue.
Ultimately, on the front end, the report suggests, private exchanges should be able to offer "intuitive, easy navigation across multiple products accessible via PC or tablet," data-driven health plan recommendations and options for bundled products, like life and dental insurance.
"The private health insurance exchanges that make the right moves in the next 18-24 months will be the ones who are better positioned to achieve sustainable growth as this robust market matures," Accenture analysts argue.
Beyond enrollment growth, success will also require increasing the value proposition for both employees and employers, as Moody's analyst Bruce Ballentine argued in a recent report.
"We believe the most successful exchanges will be those that minimize growth or generate savings in overall healthcare costs, rather than simply shifting costs from employers to employees," wrote Ballentine and colleagues.