By Jeff Yaniga, Maestro EVP of Exchange—East (aka Exchange Guru)
Those of us old enough to remember the early days of e-commerce remember when all our customers had to have a website where they could sell stuff...whether it made sense or not. Board rooms everywhere were trying to figure out this wave and how they could serve their customer base via the Web.
Over time, “killer applications” developed and companies figured out how to use the Web in a way that made sense. Is history repeating itself in the employee benefits space? If you attended a benefits conference in 2014, you were inundated with the buzz topic of the year: “private exchanges”. Trends are forming, which means we all start polishing off our crystal ball in an attempt to determine where this is all going:
The consumer learning curve will spike upward.
Consumer inertia. A consumer at rest remains at rest unless acted on by an equal and opposite force. The Affordable Care Act enables auto-renewal for those that do nothing, and do nothing is the expected action.
The equal and opposite force will come in the form of narrower networks and premium increases. This year consumers will figure out the “cost” of doing nothing especially if their premium spiked or their network “narrowed”. When by doing nothing they suddenly have a much bigger expense, the learning curve will steepen. If they present their insurance card at their doctor only to learn he or she is no longer in-network, the average consumer’s acumen spikes—along with their blood pressure.
While we can’t tell yet if consumers are switching, early indications are that many HealthCare.gov users are returning to shop, an early sign that consumers are realizing the importance of making a sound decision.
Employers and brokers will graduate from “Private Exchange School” and start to deploy.
In October, Forbes published an article suggesting that over three million Americans would secure their insurance via private exchanges (“More Employers Shifting Health to Private Exchanges” October 2014). Other consulting firms have quietly suggested this number is closer to four million. Either way, this number is still relatively small.
In 2014, many brokers and employers window-shopped various exchange solutions. In 2015, they are going to leap. Some will leap because they are afraid of being left behind. Others will leap because they demand more predictable benefits expenses. Still others will leap because they are patriarchal in nature and realize that their employee constituents will benefit greatly by having more knowledge and more choice.
Benefits shopping technology will trailblaze, especially for self-funded plans.
Mark Twain is widely credited with the quote: “The best predictor of future behavior is past behavior.” Technology leverages this mantra each and every day, and sophisticated shopping technology makes this look easy.
Self-funding and the employers and brokers that understand it have a distinct advantage thanks to technology. In general, we learned that given choice via private exchanges, employees would “buy down” in year one. But what about year two and beyond? In order to truly impact trend long term, technology must enable smarter shopping.
In year two, smart technology understands the shopper and the shopping experience can be catered to those things that are known. For example:
- Is the shopper a “show-me-the-prices-first” shopper?
- Is the shopper tolerant of answering questions that will lead to a personalized recommendation?
- Did the shopper dial the call center versus completing an enrollment online?
Trailblazing technology will utilize the “knowns”, much like how Amazon and TurboTax constantly gather information to streamline your experience.
In a self-funding scenario, this opportunity is super charged thanks to claims data. By performing a “claims replay”, a shopper can be served with simple, effective education to optimizing this year’s choice based on what is known from last year.
What are your predictions for private exchanges in 2015? Do you agree or disagree with the predictions above?