Cigna launched a private exchange this week, touting a new option for employers and choice for employees in a statement — an announcement that comes on the heels of many private
“Entering into the private exchange marketplace extends Cigna's strategy to give our customers more options to select a plan that meets their needs, including fully integrated products and services designed to improve their health and get the most from their health care dollars,” said Dave Guilmette, president, global employer segment for Cigna. But, as might be expected, Cigna’s products will be the only type offered on this exchange option.
At the Root
When the concept of an exchange began to enter industry discussions several years ago, it was largely thanks to the Affordable Care Act’s vision of public exchanges, which include multiple carriers. “A lot of the dialogue around the public exchanges assumes consumer choice in terms of carriers,” says Don Garlitz, executive director of exchange solutions at bswift, a technology company that’s built the backend of many private exchanges including the state of Utah’s SHOP exchange and also launched its own private exchange this week. “But, we need to expand our view on this in order to see what might be coming in the next five to 10 years.”
Garlitz says that many of the exchanges popping up lately are targeting smaller businesses, and carriers aren’t interested in competing with each other on this small scale. “Our view of a private exchange is something that gives the consumer some choice. I’m very comfortable calling a single carrier marketplace a private exchange,” Garlitz says. “I’d argue too that … if it gives them flexibility on how much risk they want to take, as in the deductible, and they have a choice on access, in terms of narrow networks versus broad, and if this is out there then I think it’s a viable marketplace even with a single carrier.”
‘Not a Supermarket’
He adds that many in the industry, including brokers, are still trying to “sweat out” the definition of a private exchange. But at least one benefit adviser is certain of what a private exchange is not. “A single carrier can’t offer an online marketplace because that’s not a marketplace,” says Joe Markland, president of HR Technology Advisors in Wrentham, Mass. “When a carrier will coexist with their competitors, then I will acknowledge that is a marketplace, but if I am limited to one vendor then I would not call it a marketplace — it’s not a supermarket, I don’t have five brands of cereal available.”
At press time, Cigna had not returned a request for comment on their exchange.
Markland adds that employers need to really think before putting their employees on a site that offers options in terms of deductible amount and network size. “In essence, the exchanges will result in employees doing things that an employer may not have intended or not desire,” he says, adding that a 25-year old who chooses a $3,000 deductible plan probably doesn’t have the cash sitting around, should something happen to him.
On bswift’s own marketplace, whether there will be multiple carriers is a mixed bag. From a medical standpoint, Garlitz says, fully insured plans will likely only have one carrier option, though there’s some flexibility with self-funded plans to offer multiple carriers. “On the smaller end of the [employer] spectrum we suspect they’ll stick with one carrier,” he says.