Private Exchanges Experience Hyper-Growth

Private health insurance exchanges are experiencing hyper-growth. Accenture predicts that private health insurance exchange participation will approach public exchange enrollment by 2017, if not sooner. Enrollment figures indicate an earlier-than-expected growth spurt. Accenture estimates that there were more than 3 million people enrolled in private exchanges during the 2014 benefit year.

However, lagging back-end benefit administration capabilities may restrict the growth of some exchanges. Most employers believe that benefits are a key differentiator in the market for talent. Many tailor their benefit plans for specific sets of their workforce. This tends to be fairly simple for smaller companies, but is complex for larger companies. Benefits often vary based on workforce elements, such as full-time vs. part-time, executive vs. non-executive, and geography. These variances can influence which products are offered and how much the employer subsidizes. Although exchanges are working hard to standardize product offerings, they should offer solutions to manage these complexities. New defined contribution strategies that may very across these employee groupings compound these challenges. Changes to the employee population adds to the complexity of enrollment process. Exchanges that don’t streamline and automate enrollment and eligibility processing are likely to fail to deliver on a core promise of reduced administrative burden.

The complexity also grows as exchanges allow employers to offer more products from multiple carriers. Employers that had only offered a few plan options (typically less than three) for medical insurance, often with no carrier choice, are managing five or six medical plans from three to five carriers. There are also additional products and carriers for dental, vision, life and other types of voluntary or ancillary insurance.
With such a large volume of information, issues arise around how to pass data back and forth across organizations or how to handle exception processes and reconciliation. For more information,

Last Updated 08/10/2022

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