More firms jumping into private exchange game
By Kathryn Mayer
Wellness and private exchanges are both big trends in the benefits industry. And Willis is planning to capitalize on both with its new exchange.
The global risk advisor, insurance and reinsurance broker last week announced its launch of The Willis Advantage, a private insurance exchange that allows employers to set fixed contribution levels toward the cost of medical, dental, vision and other benefits for employees and their families.
The exchange also will include a suite of worksite wellness programs and services designed to motivate employees to take control of their health care and their money.
Willis joins the growing number of firms diving into the private exchange game, but the firm says its big differentiator is its focus on health and productivity among employees that will essentially drive down costs.
Willis Human Capital Practice CEO Jim Blaney says other private exchanges have “done little to address the underlying costs of health care.”
“Employers have varying degrees of interest in the private exchange concept,” Blaney says. “We want Willis to be in the best position to assist employers in transitioning to a defined contribution exchange environment at a pace that makes sense for them and their employees.”
Willis is focusing its attention on mid-market employers, while most other private exchanges have gone after large employers.
The options will be attractive for employers who want to advance their cause in promoting a healthier and more productive workforce, says Rob Harkins, who is heading up Willis’ exchange.
“By developing something that addresses cost on the front end encourages wellness and overall improvement in the health status of individuals,” he says. “By building that into the exchange front, we feel that we are doing something unique and different. It’s the next logical step in consumerism.”
A growing industry
Willis, for one, said it began considering launching a private exchange in early 2012.
“The exchange vehicle is a legitimate and valid way for business to be done and the industry requires it now,” Harkins says.
According to research from health consulting firm Mercer, 56 percent of employers are considering moving to this model for active or retired employees, tripling over the last year.
In January, Mercer launched its own exchange, and since announced 20 major providers that have joined its exchange.
Consulting firm Aon Hewitt, which launched its corporate exchange last fall, said last month that more than 100,000 U.S. employees successfully enrolled in health benefits through its exchange during the 2013 annual enrollment period last fall. The growing industry, experts say, is being driven by employer demands for a more cost effective way to manage benefits. It also reducing administrative burden for employers and puts employees more in control of choosing coverage.
Private exchanges work similarly to the public exchanges set up by the Patient Protection and Affordable Care Act in that consumers will be able to compare and choose their own health plan. For the most part, employers give workers a set amount of money to spend on health insurance and other ancillary benefits in a private exchange.
The hope is that exchanges will increase competition between health insurance plans, thus leading to better prices for consumers.
While public exchanges are set to go live Jan. 1, private exchanges are hitting the market fast.
Originally published on BenefitsPro.com