Will private exchanges become the new Travelocity?
May 29, 2012 | By Dina Overland
I love searching for and booking all my travel
needs on one online site like Travelocity. It streamlines the process, minimizes
paperwork and saves me valuable time and energy along the way. Some payers are
hoping health insurance exchanges can provide a similar value to customers
shopping for health plans.
And they're beginning to put their money
where their mouths are. Since last year, private exchanges run by insurers have
been cropping up around the country. Highmark and Blue Cross Blue Shield of Kansas City established
exchanges last year. WellPoint, Blue Cross Blue Shield of Michigan and Health Care
Service Corporation bought a 78 percent stake in Bloom Health, an online marketplace offering health plan
options to almost 50 companies. And in Iowa, where state lawmakers decided not
to pursue a state-run exchange, legislators are urging insurers to establish their own private exchanges. These
privately run marketplaces would be free of government oversight, fees and taxes
and would have ample funding available from insurers' cash in reserves.
"Private exchanges--regardless of the Supreme Court or the election in the
fall--are going to reach into all facets of what we do," Kathy Dunmire, vice
president, product management at Blue Cross Blue Shield of Minnesota, told
FierceHealthPayer. "Just like today when travelers can book flights,
cars and hotels in one place, our industry is going to use private exchange
platforms to make the buying process easier, more understandable and less
expensive for our members."
And Dunmire should know. In July, her
company will be rolling out its own private exchange called Blue Choice, a
defined contribution model for employers run by eHealth.
Blue Cross was
motivated to create the private exchange in response to "three, overriding
market demands," Dunmire said. Members wanted more choice and transparency;
employers needed greater ability to control costs; and members and employers
want easy-to-use solutions and help from Blue Cross and our brokers in
navigating the increasingly complex world of health benefits.
Just like
booking a flight online, Dunmire explained, Blue Choice allows members to
compare multiple plan options and choose the one that's best for them and their
family based on what's most important to them, for example, monthly premiums,
deductibles, network or benefits.
"Our goal for Blue Choice is to give
employers more control, agents and brokers a way to provide value to their
customers and employees greater choice," she said.
Further fueling
insurers' interest in private exchanges is the increasing modernization of
insurance products and insurers' need to continually differentiate their brand
from their competitors. Plus, exchanges allow insurers to reinforce their value
composition to customers, Bill Hanis, vice president of eHealth technology and
exchange solutions, said.
"The process is paperless and efficient, with
all information at the employees' fingertips," Hanis told
FierceHealthPayer.
Dunmire echoed that sentiment. "We see Blue
Choice--the exchange technology--as a platform for how we do business in a
market that is increasingly moving toward an e-commerce model," she
said.
Although there's no one set purpose for private exchanges, Hanis
said, they generally serve as an alternative distribution method for payers to
promote their products. "That could be individual, senior, group products; all
exist in exchanges and are gaining in popularity," he said. Indeed, eHealth's
total membership, including individual and family plan enrollees, has increased
every year, with a 57 percent increase in total estimated membership from 2007
to 2011.
The growing interest in private exchanges makes Dunmire
confident that Blue Choice will serve as a valuable and promising option for
many employers. However, she recognizes that it's still early in the market, so
Blue Cross expects "a growth curve similar to that of defined contribution
pension plans or consumer-directed health plans." That's why Blue Cross made the
Blue Choice platform scalable, allowing the insurer to "continue to grow the
exchange to meet evolving market needs."
I look forward to one day
lounging on my sofa as I research and eventually purchase my health insurance
plan online on my laptop. And then I can switch tabs and quickly book a flight
to visit family and, while I'm at it, even order a pizza too. -Dina (@HealthPayer)