Using the first official talk at the Benefits Forum and Expo in Orlando, FL as an indicator, this conference is going to dig deep and wide into issues relevant and controversial in the industry.
We begin with private exchanges. These contentious tools for health benefit enrollment have fallen in and out of conversation, with vocal managers on both sides. Many say that they are a way to cut costs and increase employee engagement – while others are still concerned that they are too complex and take control away from the employer.
So it was fitting that, later in the afternoon, the conversation turned into a debate (in cheerful, gameshow form, of course) between adopters of private exchanges and companies who chose self-managed benefits programs instead.
The opinion from an early adopter
With healthcare costs rising and uncertainty increasing, employers are "like penguins on a melting iceberg," Jacob Lawrence, a senior consultant at Towers Watson, said during his presentation. Some employers will jump into innovation immediately, while others will take as long as possible before dipping their toes in any change at all.
Don King and his company, Envision Healthcare, were early jumpers (and adopters of Towers Watsons' own private exchange). King, VP of compensation and benefits, described five key questions employers need to ask about their potential plans when they consider shifting to a private exchange.
- Will it save money over time?
- How many markets will your company need to account for?
- Is wellness a part of the plan?
- What is your funding approach?
- Can employees understand it easily?
Lawrence noted that their private exchange plans limited cost increase to 1.8% between 2014 and 2015 versus 5.2% of the year before. The value proposition, King added, includes competitive choice between carriers, sustainable cost and the use of solid, cutting edge technology to streamline benefits implementation.
But he also considered two cons that companies may face: a loss of negotiating powers in plans and the increased complexity that comes with increased choice.
Later, two groups of professionals came together to (respectfully) debate the same issue. The companies on both sides – private exchange vs. self-managed plans – saw saved costs and improved employee engagement. The main question: is increased choice actually worth it?
While Lawrence said in the earlier talk that surveys show employees enjoy the choice provided to them via private exchanges, those on the self-management side didn't buy it.
"They want a plan they can understand, that is affordable, and will have someone be there for them," Jennifer Forster, HR Director for Buffalo Exchange, argued. While choice sounds nice, employees don’t ultimately want it, she added.
Rob Harkins, practice leader for exchanges at Willis, declared that approach as thinking "the old way." People do want choice, he said, especially since the technology available for private exchange management is top notch. But it's important that the technology be seen as an educational and engaging tool, rather than as an overwhelming spreadsheet of options, he added.
Another issue: is a company "giving up control" by switching to a private exchange? Michelle Murray, benefits manager for Tennant, argued that companies aren't actually "giving up" anything. Instead, companies that opt for private exchanges are rejecting the "paternalistic" employer of old, and letting employees take more control of their own lives, she said.
Still, having employees make decisions with a private exchange can be considered a business risk, Scott Wood, Principal and CEO of Benefits Commerce Group, said. Choice does not equate understanding, either, Forster added.
But both sides agreed that employers need to make a strategic plan based on what the employer needs and how the employer wishes to outwardly present themselves. Private exchanges and self-managed plans are tools in an employer's arsenal – but neither are a “silver bullet.”
The bottom line
King offered some tips on benefits plan adoption during his talk:
- Understand your culture. Know what you want.
- Commit to the change. If you are going to do it, do it thoroughly.
- Remember that shifting costs onto your employees is not the end goal.
- Be sure to educate management first concerning the plan you adapt to.
Either way, the end of the debate was emblematic of the issue as a whole. The winner was decided by applause. Self-managed plans received more claps, but private exchanges received more zealous cheers.
It was, ultimately, declared a tie.