A new survey by Aetna subsidiary bswift finds that only 5% of large employers currently offer a private exchange and only 6% are considering one for next year. They argue that these findings conflict with higher numbers reported by firms such as Accenture and Oliver Wyman—which predict that up to 33% of employees will be in private exchanges by 2018—and PwC, which estimates that nearly half of employers will have or will be considering a private exchange by 2018.
As bswift CEO Rich Gallun tells Healthcare Dive, the question is less a matter of who's right and more a matter of what everyone is talking about.
He points out that there is no standardized definition of the term "private exchange" and notes that many employers are taking a phased approach to the adoption of exchange components, so there's a great deal of gray area in what private exchange means to different people.
While the industry is asking the question of how many people are in private exchanges and what the adoption rate is, Gallun says, "We think the first question that ought to be asked and answered is, what is a private exchange?"
Seeking a common definition
The concept of the private exchange has expanded from the original idea of a marketplace for health insurance products that is supported by technology and an underlying defined contribution, Gallun says, to include options ranging from multi-carrier, to single carrier, to self-insured and more. "It's all over the map," Gallun says. He quotes Mike Smith, Director of Exchange Solutions at Lockton Benefit Group, who says that for some it's simply "benefits administration on steroids."
Those at bswift see the current concept of the private exchange boiling down to one common theme: tech-enabled choice.
"We see the biggest trend being tech-enabled choice, and some people are calling that a private exchange while other people are calling it other things," Gallun says, such as online enrollment, benefits portal or benefits administration.
What to track and compare
"What's important is what employers are doing to manage costs and engage employees," Gallun says. "Trends are definitely being adopted whether you call it a private exchange or not."
He suggests that the industry and the media should be tracking the various components of what an exchange brings to the table. "Just to say, oh this company's in a private exchange and this company's not in a private exchange—I don't find that as helpful as looking at the real trends on the ground."
He notes that aside from the question of the definition, there is also some disparity in the methodology of different analyses. Some ask employers for data while others ask vendors.
What to expect
Gallun suggests that many are now acknowledging that the adoption of what many label private exchanges for 2015 and perhaps for 2016 is not as high as some had predicted earlier.
However, he says, "The jury is out on 2017 and 2018 and I would admit that our study doesn't ask about 2017 and 2018, and perhaps things change."
He believes the definition and tracking of private exchanges will continue to evolve and that predictions for the four to five-year range will depend on these factors, as well as how healthcare evolves with the upcoming Cadillac Tax and other potential regulatory changes that are difficult to predict.
What he does expect to see is more and more use of technology and support tools such as portals to connect consumers to services such as transparency tools and telemedicine options. "And more choice," Gallun adds. "Everybody is recognizing that offering more choice today is easier than ever because of the ability of technology to help consumers shop among benefit plans."
He points out that little of this is really new.
"Decision support isn't a new thing; bswift had tools in early 2000s," he notes. "What's strikingly different about today compared to 10 years ago is the rate of use of these tools."