CHICAGO — In a room filled with dozens of brokers during a session Thursday at the Private Health Care Exchanges Conference on how to approach private exchanges, many of them spoke up with the same attitude: What’s the point?
As one audience member said, a previous panel of employers who have adopted them admitted they haven’t saved money, and many of them are just single-carrier exchanges.
Frank Mengert, partner and director of exchange technology, Ebenefit marketplace, had a simple answer.
If brokers don’t embrace it, they will eventually find themselves out of a job.
“In order to remain competitive, brokers need this. It will pick up in the next 12 months,” he said.
Caroline Melson, a private exchange practice leader at Arthur J. Gallagher & Co., agreed.
“[Exchanges] is where we’re headed. This is here to stay,” she said. “If you think this is just a fad, you’re going to get left behind.”
Perhaps most importantly, exchanges are what employers want.
“From the employer point of view, there’s a talent war going on. And there are different sets of generations who want different things out of benefits. It’s all about engaging and retaining employees. In an exchange, everyone gets what they want in their own way.”
Consulting firm Accenture predicted as many as 40 million Americans would get their coverage through private exchanges by 2018. And, according to health communications firm Benfield, about half of mid-sized employers and three-quarters of jumbo employers will consider or will be using a private exchange by 2018.
The first step for brokers? Stop being scared.
“So many brokers are afraid of it,” Melson said. “But don’t be. It’s awesome. It’s the best thing I’ve participated in in my insurance career.”
“We’re empowering people. If they begin to finally understand their benefits, they are going to change how they use their benefits. I know that happened to me.”
And that increased awareness will lead to decreased health care costs, and a better return on investment.
As for getting involved in exchanges, they shared advice.
Big brokerage houses, who have opened up their own exchanges — such as Gallagher — are flourishing. But not every brokerage has to open their exchange — and many don’t have the resources to do so, at least yet. Partnering is also a good option, especially for small brokerages and for those that are eager to roll out an option soon, Mengert said.
“It’s a process,” he said, explaining that it took years for his company to partner with Bswift for theirs. He warned that there needs to be a lot of in-house testing, a lot of evaluating and there will be roadblocks to deal with.
And for the brokers who are going with the wait-and-see approach? At the very least, Melson said, “if you don’t have an exchange, explore your options. You have to get to know what it’s about. Get up-to-date on them, read about them, know the options, know what others are doing,” she said. “It’s what I would want if I was in the employer’s seat.”
Overall, brokers who embrace private exchanges will see the benefits for themselves and their business.
In this rocky environment, Mengert said, “brokers are looking for a solution. And having this tool in your box … it gives you the ability to be competitive.”
And the exchanges can make ancillary products, such as dental, critical illness and pet insurance, at the forefront of the purchasing experience for consumers, which will help brokers increase their revenue.
“It’s a lot of work,” Mengert said. “But it’ll make you look like a hero at the end of the day if you can make it work.”
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