Looking at the New Consumer and the Use of Private Benefits Exchanges

Posted by Mike Fontana on 13 Nov 2014

I have been writing about consumer engagement and the use of technology from the consumer patient and healthcare provider relationship in these previous blogs.  We have looked at online provider portals and the use of telemedicine, and the importance of these technologies in the administration and clinical applications in creating increased consumer and information access options, communication, and productivity improvements.

What I have not spoken about is the other side of the equation, that being the benefits side and a look at the relationship between the consumer/healthcare benefits and related portal access.  At the Agency for Healthcare Research and Quality, their statistics for 2013 indicate that approximately 85% of private sector employees worked for a company which offered healthcare benefits.  Of the companies which offered benefits, approximately 58% chose to enroll.

With these statistics indicating that private employers as an important source for benefits access, one of the significant topics you may have been reading more about recently, especially during the most recent 12 to 18 months, concerns the use of Private Healthcare Exchanges by employers for their sponsored benefit programs and use by their employees.  This differs from the public exchanges or market developed for Obamacare, which we will take a look at as part of future topics.

These private electronic portals can be developed by organizations such as commercial insurance payers, administrators or brokers for access to healthcare and ancillary benefits by employees.

While you may have been able to electronically access your benefits choices from your employer portal online for many years, what is changing in the market is the employer examining the potential for, and implications of, moving from a defined benefits approach to offering more of a defined contribution model, where employees are given a lump sum of funds to pick the benefits they want from specific choices determined by the employer in the private exchange they want to participate in.

From the employer standpoint, one of the decisions they would need to make is the determination from an organizational standpoint as to whether to offer these benefits in a fully insured manner where the commercial payer would have the risk, or keep most or part of it in a self-insured model where the employer is responsible for any claims.  They would also still need to define items such as the types of benefits and networks, amount of employee risk and levels of employee funding, and future access to funds in accounts used for payments and investments.

While not all employer organizations will want to use a private exchange, their growth and development are expected to significantly increase during the next several years for several reasons we will look to examine.  Also of issue is whether part-time employees will continue to be included by these employers, and given the same access to acquire these benefits.  Recent reports showed some of the large retailers dropping part-time employee benefits for several reasons, which may or may not be more advantageous for employer and employee.

I will provide more information on these private exchanges, including statistics and information about users, technology, functions and benefits, as well as payment services,  in future posts as we further look at the new consumer and all that they will need to think about as they deal with both benefits and healthcare provider issues and opportunities.

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Mike Fontana Healthcare Industry Executive Mike has served in various roles for Consumer Directed Health Care Technology companies. His background also includes Management, Market Development, Consultant, and other roles for healthcare providers, financial institutions, and payers. Mike holds an MBA in Finance from Pace University in New York.

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