A report by Array Health, a provider of private insurance technology, suggests that the healthcare landscape is changing and indicates that private exchanges are a critical factor for accelerating the trend towards consumerism in the industry.
In the report, titled “Health Insurers Expected to Broaden Distribution Channels,” more than 140 leaders across the healthcare industry were surveyed, and the results were collected between July and August 2013.
According to the report a defined-contribution model with private exchanges may well be the future for employer groups looking to control healthcare costs and offer employees more choice. Private exchanges give consumers and businesses alike more choice and control over their health benefit options.
Array Health’s cloud-based software platform enables health plans of any size to power their own branded online exchanges. This indicates a promising future for private exchanges, which when coupled with a defined contribution funding model, could help insurers win and help employers control costs.
“We were pleased to see that many healthcare executives see a bright future for private exchanges and the defined contribution funding model,” noted Jonathan Rickert, CEO of Array Health.
But, is everyone aware of private exchanges and familiar with contribution funding model? The survey report indicates that while most employers are aware of their existence, most consumers don’t know that they exist.
In spite of this, a large percentage of survey respondents believe that in the next five years, the defined contribution funding model will become more popular than the defined benefit model, and, as the awareness about private exchanges grows, more employer groups and consumers will participate in them.
Young, healthy consumers, coined the “young invincibles,” offer health insurers a new target market. As most of them don’t comply with health coverage mandates, insurers need to be innovative in their approach to win over this section of population. This offers a tremendous opportunity to insurers and public entities.
Private exchanges and the defined contribution funding model offer immense opportunities, but at the same time they present obstacles that need to be addressed.
Edited by Blaise McNamee