To Private Exchange or Not Private Exchange - that is the question...

It’s been less than two weeks since the public exchanges opened for business.  The problems in all public exchanges, whether state run or federal run, are well known to all and now the inevitable finger pointing has begun.  I just read an article where the primary objective seemed to be pontificating on whether the initial problems could in fact be called “glitches” as the issues were “way too big” to be called glitches.  Oh brother…   

Despite the “glitches” on the public exchanges, an outcome of October 1 is employer interest in using private exchanges for providing benefits for active employees.  Generally, most employers understand that the public exchanges are not currently a venue for offering employer-sponsored health benefits to their employees (except small businesses in the near future).  With the over-abundance of information for employers to disseminate through, there are lots of misunderstandings and overblown expectations about the advantages of private exchanges.  At this point in the evolution of the private exchange marketplace, we should remember that there is limited, actual experience to review and use for the basis of analysis.  Most information available is marketing material produced by the sponsors of the exchanges.  At this point, “buyer beware” should dictate all discussions and analyses. 

Looking to the future, I have no doubt that private exchanges will play an increased role in many employers’ benefits programs, offering the appropriate delivery system to support their benefits strategies.  To me, the key word is “strategy”.  The decision to use a private exchange should be a strategic one, based on a sound analysis that has determined that an exchange is the best way to ensure the benefits program continues to meet the objectives of the business.  And, until the market is beyond the “start up” phase, any analysis must include the many unknowns and uncertainties that currently exist in the private exchange market.  Caveat emptor.

Category