Private exchanges are an ever-popular option for employers to provide health insurance to both their active and retiree populations. Estimates put the number of private exchanges at around 150, but according to PricewaterHouseCoopers Health Research Institute, they can be broken into four types. Barbara Gniewek, principal and private exchange lead with PwC in New York City, explains these are grouped based on their genesis, or their beginnings.
- Technology: This includes such companies as bSwift and Benefitfocus; many developed public exchanges in states that built their own, PwC says. Others are known for providing benefits administration as either an outsourced solution or enrollment for insurers. ???They are like the vending machines [of private exchanges]; they provide infrastructure and you decide what products you want and what brands to have,??? Gniewek says. ???They are highly flexible.???
- Pure Play: These are very new technology infused and highly flexible systems that include such companies as Liazon. They are like a pre-stocked vending machine as they come with products on the shelves, including medical plans with certain carriers, Gniewek adds.
- Broker/Consultant: Calling these ???really interesting,??? Gniewek says they are built on technology platforms. They include such companies as Aon Hewitt and Arthur J. Gallagher & Co. Some of these are built in-house by the broker or consultant, but in many cases, are the result of partnering with a technology company
- Insurer: Including such companies as Cigna and Aetna, their strategy was to build their own private exchange to protect market share and separate themselves from the competition. The insurers, Gniewek adds, may also have relationships with networks and have clients they want to protect. Many of these also use technology developed by others.
So how does an employer pick which model to choose? Employers often rely on their advisers, including brokers and consultants ??? many of whom have their own exchanges. Gniewek says when PwC helps a client they do two main things as an evaluation:
First, an understanding what the employer is looking for, including making their own plan design or enhancing a strategy they already have. ???Depending on what they are looking for, exchanges that meet their needs can differ greatly,??? she says.
PwC also helps employers understand the different models and which plays to their employee size. ???Which ones can best meet [employer???s] needs???? she asks. ???That is what the consultant needs to do.???