3 Reasons Why 2014 Was a Pivotal Year for Private Exchanges
There’s been a lot of talk about the future of private exchanges, including from my co-founder Ashok Subramanian at EBN’s Private Exchanges Conference in NY a few weeks ago. But as we look toward another year of empowering consumers to make their own decisions when it comes to their benefits, I think it’s important to look back on the significant shifts that have occurred in 2014 that will have a profound impact on our industry moving forward.
1. Consolidation is validation.
The consolidation trend started way before 2014 but the latest acquisitions to take place in the past 18 months (including Towers Watson’s acquisition of Liazon) have been further validation of the private exchange model. These business plans attract the capital of buyers because they work, and because they have demonstrated success and are well poised for future growth. This is how industries are built – first a few small players with a vision, then some competitors emerge, then growth, then investment, and eventually, an industry shakeout, leaving lead players. But whatever future acquisitions may be in store, there is no doubt private exchanges have now claimed their rightful place in the macro-economic structure of benefits, human resources, brokerages and consultants. The industry is quickly evolving from bleeding edge to leading edge.
2. Public Exchanges are working too.
More than 7 million people signed up for health insurance through the federal exchanges for the 2014 coverage year, as of September, 2014. A report issued by the Department of Health & Human Services predicts that the number of insurers offering individual health plans on the ACA exchanges will increase about 25 percent in 2015, and that should keep prices down. And exchange data released this week from the Department reports nearly 2.5 million consumers selected plans for 2015 since the beginning of Open Enrollment – more than one million in just the last week. They also report over 11 million individuals to be “users” of the federal public exchanges this year from November 15th – December 12th. Clearly, people are and should be shopping on exchanges.
3. The data is here.
2014 was a pivotal year in data capture for private exchanges. Liazon’s data volume has grown more robust and we plan to continue to make data analysis a key focus in 2015. Three times as many people and two times as many companies used Liazon’s platform for open enrollment this year compared to last year, and this year we had more variations in the types of models offered – from fully- and self-insured, to single- and multi-carrier – to measure the data against. More people buying through our exchange will give us added clarity into what factors people are considering when they buy benefits, yielding insights not only for enhancing our Exchange, but for brokers, carriers and the industry overall. Employers are asking and should continue to ask, “How will choosing benefits on a private exchange impact my employees?” and the platforms that have the most precise answers will come out ahead in 2015.
For Liazon, our model saw further validation this past year when Towers Watson incorporated our existing structure into their organization without fundamentally changing the way we operate. Further, the broad distribution of brokers who are licensed to sell our platform have confirmed for us that, as the trusted advisors to employers, they are best suited to deliver our message as partners.
Happy New Year – I’m confident it will be for the benefits exchange industry, and for all the employees, employers, brokers and consultants that have made Liazon their private exchange platform of choice.