Filed Under:Health Insurance, Individual Health

Private exchange firm: PPACA should help us

Bain's venture capital arm is an investor

The venture capital arm of Bain Capital -- the private equity company that Mitt Romney started -- helped round up $12.6 million in financing for Liazon Corp. in April 2011.

Liazon is a private exchange company -- a company that offers employers a vehicle for offering a long menu of benefits options from many different carriers, rather than a choice of just a few health plans.

When Liazon started marketing the private exchange concept to employers, and to insurers, five years ago, Subramanian had to lobby hard to get the insurance company executives to consider the idea of offering their products alongside products from other insurers.

In the past two weeks, Subramanian said, three carriers have come to Liazon and suggested that Liazon should offer their products through a multi-carrier exchange.

The public exchanges should be great for the companies and individuals that qualify for the PPACA subsidies, but only some individuals and companies will qualify for the subsidies, and many companies will be shut out of using the small business exchanges at first.

Liazon has been competing companies like Word & Brown and Aon Hewitt to offer exchange-style one-stop shopping for employers that must or want to operate outside the public exchange system.

Today, one challenge is that the word "exchange" is more a metaphor than a legal reality: In most cases, because of state-by-state variations in prices and insurer underwriting requirements, Liazon must set up a separate exchange for each employer. The company has developed technology it can use to create an employer's exchange with little extra cost, but setting up multi-employer exchanges is still difficult, Cohen said.

If PPACA succeeds at restricting insurers' ability to use health information when pricing small group coverage, Liazon and its competitors may be able to offer true multi-employer exchanges, Cohen said.

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Nichole Morford

Nichole Morford
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