The ability to offer a large suite of insurance products is a major selling point for defined contribution plans on private exchanges. "We're getting a group or member to select from the umbrella of Highmark products," Brown says. "There's a benefit to Highmark to put all its products up and sell them as one. … It's a great opportunity for Highmark to grow our subsidiary business."
Private exchanges offer several advantages to employers and employees, Brown contends. On the employer side, he cites a 450-employee business that reaped huge administrative cost-saving gains from purchasing health coverage on one of Highmark's private exchanges. "They did all their enrollment on paper. They moved to our platform to move themselves to an online platform. It's saving them hours and hours of work every month."
For employees at small businesses, workers can choose a product tailored to their needs, Brown says. "For the most part, in the 100-and-under sized company, they had never had the opportunity to buy products that are what their families need," he said. "With private exchanges, you have employees picking policies that are right for their families and the stage of their lives."
Keys to Success
For insurers seeking to launch private exchanges for group coverage, Brown says the keys to success include careful market assessments and picking the best IT partner possible. "We wanted to make sure we hit the right markets at the right time."