What Does the Future Hold for Private Exchanges? Liazon’s CEO Weighs in at EBN’s Private Healthcare Exchanges Conference
Ashok Subramanian, second from left, gives his views on the future of private exchanges at Employee Benefits News’ New York “Private Healthcare Exchanges Conference,” along with Shandon Fowler of Benefitfocus, Sherri Bokhorst of Buck Consultants, and Cathy Gobes of Aetna.
At last week’s kick-off panel at the New York City Employee Benefits News “Private Healthcare Exchanges” conference, leaders from an array of private exchange platforms gave a look toward the future, which was very much influenced by the year that just passed. Here are some of Ashok Subramanian’s reflections and predictions on what is – and what’s coming – in the world of private exchanges.
The Evolution of Private Exchanges
Ashok reflected on this past year as “another step in the evolution we’ve seen over the past seven years” at Liazon. He cited data from Liazon’s 2014 open enrollment with stats like “3X the people” and “2X the companies” used our platform compared to last year, which had more variations in the types of models we offer from fully- and self-insured, to single- and multi-carrier. The data is far more robust this year, he said, noting that “how people buy benefits in different environments will yield insights for brokers, carriers” and the industry overall.
Ashok urged industry personnel to “leave common convention at door if we’re going to see a new world of benefits.” If people, not companies, are to be making decisions about their own insurance, we need to forget the expectations that older, sicker people will choose one plan, and younger, healthier people will pick another. “It’s a more complex reality” than that, he said, noting data from our model which showed that age wasn’t a driving factor around plan selection.
He also pointed to data indicating that narrow network plans with a price differential of 6% saw an uptake of 25 – 30% when people are buying them directly, in contrast to the uptake when an HR person is making the decision, which was zero. “You have to recalibrate the whole mental model of what you think people will buy,” he said.
Ashok said that health insurance has a health component but also an insurance component – how to protect income and assets. The consumer experience elements will become increasingly more relevant with more open architecture options and models like multi-carrier exchanges, which will bring a new level of thinking on the part of individuals. This will change the way carriers approach the lifecycle of membership, everything from how to engage consumers year-round to how claims are paid and managed. “Over time,” he said, “the impetus will be on providing information and this is going to be severely affected by new models, new sets of tools and assistance.”
More Than Just “Putting Lipstick on a Pig”
Ashok sees two distinct camps of how private exchanges are being viewed currently; one as an amped up, web-based benefits administration system; and two, as a fundamental disruption in how benefits are being delivered. “When you consider changes in the group benefits system going forward,” he said, “it’s important to consider which camp you’re in. The group-based mental model was that employees were too stupid to choose. We have to get over this hurdle and see the true consumer world as more than just a highly evolutionary way of putting lipstick on a pig when it comes to group benefits.”
Ashok also said that “along with value-based reimbursement, better care coordination, tools and transparency, we need to recognize that individual accountability drives tremendous change in every aspect of our economy.” As a case in point he offered the example of prices of taxi medallions being down 17% in some major U.S. cities as a result of reduced sales volume, according to a recent article in The New York Times. Why? Thanks to Uber, taxi fleet owners are all but giving up, as they’re not going to make up their value because “consumers have blown the whole concept open.” Acknowledging that health care is different than taxi services, he offered conclusively: anyone who thinks that “170 million people who get insurance through their employers can’t have a voice when collectively brought together as individuals” is flat out wrong.