5 Reasons Why Private Exchanges Make Sense for How We Live Today
The McKinsey Global Institute reported in 2013: “…technology represents new ways of doing things, and, once mastered, creates lasting change, which businesses and cultures do not ‘unlearn.’” Nowhere is this more apparent than with some of the disruptive technology breakthroughs we’ve witnessed in the past 20 years. Remember depositing checks by visiting a bank teller? Making a call on a payphone? Listening to an actual record? And soon, thanks to services of the emerging “sharing economy,” you may not be able to remember what it was like to hail a cab or book a hotel room.
We at Liazon put private exchanges for employee benefits in this same disruptive category. All of the breakthroughs cited above – ATMs, smartphones, Uber, Airbnb, etc. – were new at one point. And people were reluctant to use them. But the reason these companies were able to cause the disruptions they did was simple – their products or services made sense and filled a need.
Here Are 5 Reasons Why Private Exchanges Make Sense
1. People are used to buying things online. Why not insurance?
It may have started with books and groceries but now people are buying everything from shoes to airline tickets to cars online. E*TRADE made buying stocks online acceptable, Zillow helps people get started on purchasing a home, and LendingTree makes it possible to get a loan, yes, online. So why not health and other types of insurance, like disability, hospital indemnity, accident, even pet insurance? Private exchanges like Bright Choices® make it possible for consumers to purchase insurance coverage offered through their employers online, and use sophisticated decision support (much like Amazon.com, online dating sites and travel sites) to help guide them to make the right purchases for them.
2. Insurance is a private matter and should be considered thoughtfully – 30 minutes can affect an entire year.
How much should an employer know about an employee? How much can they legally ask? When it comes to choosing a benefits portfolio to protect individuals against the uncertainties in life, employers can only know so much about each one’s needs and preferences. So when they offer only a few plans to their entire workforce, employers can’t really take into account what might be right for each employee. Thirty minutes is all it takes to complete the Bright Choices profile questionnaire, which is how we obtain specific information about each individual’s needs and preferences. Our system then uses this information to recommend a combination of plans that work together to create a balanced benefits portfolio for each employee. Their information stays private; employers only see what coverage options have been chosen.
3. The rules are changing, the conversation is happening. Insurance exchanges account for these developments.
The Affordable Care Act (ACA) has made it mandatory for some companies that have never offered benefits to their employees before, to now do so. And because of the ACA, which led to the development of federal and state-based public exchanges, along with the early adoption of private exchanges, people are talking about benefits coverage and trying to understand their options more than ever before. Private exchanges like Bright Choices help these companies to be ACA-compliant, and help employees to understand their options. It’s revolutionary and it’s disruptive in the best sense of the word.
4. Health care consumerism is here.
In 2014, Liazon reported on the rise of a smarter, more empowered consumer, defined as:
“…one who has a greater understanding of all aspects of his or her benefits, and a greater appreciation for both the employer’s contribution, and how to maximize that contribution.”
Similarly, organizations such as The Institute for HealthCare Consumerism have sprung up to “enable all stakeholders to collaborate in effective ways that promote the growth of healthcare consumerism,” defined as:
“…transforming an employer’s health benefit plan into one that puts economic purchasing power – and decision-making – into the hands of participants. This is best achieved by supplying employees with the decision-making information and support tools they need…”
We couldn’t agree more. This philosophy is at the core of our private exchange model.
5. It makes financial sense.
Each year, employers are faced with the inevitable rate increases from insurance carriers and they have a decision to make: pay more for their products, change carriers and plans, cut coverage, or shift costs to employees; in effect, choosing among the lesser of four evils. We believe employers are best served by determining a pre-set budget for insurance coverage thereby taking control of their costs from year to year, rather than being at the mercy of the providers, taking something away from their employees, or making employees work harder for less each year.
It makes sense not only financially, but from a practical perspective as well.
Photo: www.wordle.net; McKinsey Global Institute analysis, May 2013