The business outlook for private insurance exchanges continues to improve even though the products have yet to reach their full potential, according to the results of an Array Health survey.
Fifty-two percent of the insurance professionals responding to the survey said that private exchanges have helped them reduce administrative costs, while 48 percent said having an exchange has helped increase market share.
In addition, 71 percent of respondents said they believe the majority of insurers will offer a private insurance exchange by the end of 2017, while 44 percent said a majority of employers will offer benefits through such exchanges within the same time frame. This supports previous research from Accenture and the Kaiser Family Foundation, each of whom suggested that private exchange enrollment will rise from 6 million in 2015 to 40 million by 2018.
That said, survey respondents do see challenges ahead. For example, 78 percent of respondents said they believe that less than half of private exchanges will offer "a robust and comprehensive set of ancillary products" ranging from life insurance to pet insurance.
What's more, respondents said the defined contribution model is often misunderstood. Employers know that it brings more predictable costs, the survey found, but they hold off on adoption because they fear a negative reaction from employees.
Finally, respondents agreed that the term "single-insurer private insurance exchanges" needs rebranding, as it confuses those outside the insurance industry and does not reflect that fact that an insurer's exchange will include ancillary offerings.
Private exchanges are poised to change the health insurance business due in large part to their increased emphasis on transparency, outreach and customer service, FierceHealthPayer previously reported.
- read the Array Health report (.pdf)
Private health insurance exchange enrollment tops 6 million
Experts predict private exchanges could see 300% growth this year
Kaiser Family Foundation: Private exchanges could reshape the health insurance industry
Report: Exchanges will transform the health insurance business
Defined contribution plans, private exchanges could steer employers to savings