Employers are likely to adopt private health exchanges in growing numbers, seeking to save money and meet consumer demands. Health plans will have to invest in IT and re-orient their sales efforts to the individual.
The government health insurance changes established under the Patient Protection and Affordable Care Act may be faltering, but private exchanges will grow significantly in the next few years, driven in large part by consumer expectations and healthcare reform, according to a recent analysis.
Several factors are positioning health insurance exchanges (HIX) for rapid growth, says Nancy Fabozzi, principal digital health analyst with consulting firm Frost & Sullivan.
"Healthcare reform efforts are continuing to focus on expanding the private insurance market and private insurance coverage," Fabozzi says. "Republicans are looking to expand market opportunities by lowering regulatory barriers and restrictions, which I think is going to lead to more price competition, market expansion, and hopefully innovation."
Like the government-run exchanges, private HIX are self-service online stores or marketplaces that individuals can use to select health plans and other benefits, Fabozzi notes. Private HIX predate the Obamacare exchanges, but employers have not chosen HIX for their employee coverage as much as some industry leaders had expected, she says.
Employers are likely to use HIX more now because beneficiaries have come to expect a better e-commerce experience after shopping online so much, she says, and they expect easier enrollment, control over the benefit selection process, and pricing transparency.
The exchanges can help employers save money on healthcare costs, so they are increasingly popular, especially with employers that have a large retiree population, Fabozzi says. In many cases, employers provide a defined contribution to the employee for health insurance, and the employee can shop on the exchange chosen by the employer.
Healthcare reform probably will include incentives that lead more employers to use defined contributions, Fabozzi says. Some HIX sell additional insurance products such as dental, vision, life, and disability.
"Even before the Republican effort for reform, we had seen a move toward high deductibles and consumer-driven health plans, and that's definitely going to continue no matter what happens with health policy in Washington. It's just the trend in the market," Fabozzi says.
Gregory A. Freeman is a contributing writer for HealthLeaders.