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Life Health > Health Insurance > Health Insurance

Private exchange picture still blurry

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Now that the public exchange system has wobbled to the official end of its first open enrollment period, the private exchanges might get a little more attention.

The Patient Protection and Affordable Care Act (PPACA) public exchanges will have to thread their way through paperwork mazes to find excuses to sell qualified health plan coverage to individual consumers.

For now, most brokers and insurers assume the ordinary individual plan enrollment hiatus will also shut down sales of individual major medical.

Private exchanges built on a group chassis are in a different situation: No open enrollment period applies to them. They can sell coverage to people who have no special excuse to buy.

Just how big is the private exchange market right now? How well – or poorly – have the private exchanges been doing, operationally speaking, when compared with the public ones?

The public exchanges have come to life in a fish bowl. The U.S. Department of Health and Human Services posted detailed statistics about the number of plan selectors, ages and genders.

Just getting ballpark estimates of how many employers might be in private exchanges, or how many health plan members those employers have, remains difficult.

Accenture estimated a year ago that the private exchanges could be serving a total of 1 million people this year – or just a fraction of the 7.1 million people who’ve selected plans through the public exchanges.

One challenge is companies’ desires to keep competitive intelligence to themselves.

Another challenge is defining the term “private exchange.”

“There are so many different kinds of exchanges,” Shandon Fowler, an exchange specialist at Benefitfocus – a benefits technology services company – said.

Benefitfocus is not a public exchange vendor, but provides information system services for many private exchange managers, and it helps carriers connect with both the public and private exchanges.

Private exchanges could sell products from one carrier or many; for one employer plan or many; and for insured plans or self-insured plans. 

Some focus on medical insurance, some on other types of products, and some both on medical insurance and other types of benefits.

“It reminds me of the dot-com boom,” Fowler said.

Which ones will survive when the boom ends?

Fowler is reluctant to try to make observations about what the public exchanges did right or less right, or what distinguishes successful exchange projects from the less successful projects.

“It’s a tough business,” Fowler said. 

But Fowler said one important point is that enrolling people is just one step of many that an exchange has to perform.

“What happens after the application is submitted is the less glamorous side but probably the more important side,” Fowler said.

The administration job includes both the back-office work needed to set up a new account and the back-office work needed for servicing in-force coverage, Fowler said.

See also:

AHIP CEO suggests lower tier of health insurance

Private exchanges may offer shelter from Cadillac tax

Some state PPACA exchanges report big gains


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