Will some benefits products sell much better through private exchanges than they have through traditional distribution channels?
Analysts at the Kaiser Family Foundation consider that possibility today in a report on the private exchange movement. The analysts note that private exchanges serve only about 2.5 million people today, and only 1.7 million group plan enrollees. But they say that Oliver Wyman has predicted that private exchanges could serve employer plans with 39 million enrollees by 2018, and that Accenture thinks private exchanges could handle 40 million employer plan lives.
The Kaiser analysts say the use of private exchanges could have some surprising effects, such as harnessing the power of consumer inertia to reduce the likelihood that enrollees will change plans.
The analysts also talk about some of the products and services that could do well in a private exchange benefits market.
Here are three of the possible private exchange universe winners.
1. Programs that combine high-deductible health insurance with health savings accounts (HSA) or other types of personal health accounts.
- The Kaiser analysts found that private exchange users care more about minimizing monthly premiums than minimizing out-of-pocket costs.
- About 40 percent to 60 percent choose HSA-eligible plans.
- Outside of exchange programs, only about 20 percent of enrollees have HSA-eligible coverage, the analysts say.
See also: HSAs reach nearly $23 billion
2. “Ancillary benefits,” such as dental insurance, vision insurance, critical illness insurance and accident policies.
Many producers who sell products such as dental insurance hate to hear anyone calling their products “ancillary products.” Those producers point out that taking care of people’s teeth and eyes is as important to maximizing overall health as any other kind of health care.
So far, however, builders of the Patient Protection and Affordable Care Act (PPACA) public exchange system have responded to legal constraints, and constraints on time and funding, by giving little attention to dental benefits, even less attention to vision benefits, and no attention to other types of benefits. Exchanges have released confusing data on the percentage of children who actually ended up with the PPACA dental benefits they were supposed to get, for example, but the number seems to be low.
At the private exchanges, managers typically offer a full array of non-medical health benefits. At exchanges run by Liazon, for example, consumers buy dental 60 percent of the time, and vision benefits 40 percent of the time, the Kaiser analysts say.
At Array Health, the carriers who use that company’s single-carrier exchanges generate twice as much ancillary benefits business as they had before they started using exchange systems, analysts say.
3. Wellness programs and other post-enrollment services.
The Kaiser analysts note that some exchanges provide programs that combine access to wellness services along with telemedicine services, health finance tools, price transparency tools and health concierge services.