By Barbara P. Gniewek (PwC)
Private exchanges may represent the biggest disruption in employer sponsored benefits since employers began offering health benefits as a competitive advantage. And while many employers are considering (not adopting, but considering) an active benefit strategy that incorporates these exchanges, one thing is clear -- as much as private exchanges allow employees to right size benefits to meet their needs, private exchanges can also allow employers to right-size their benefit strategies to best meet their HR / Corporate needs.
Private exchanges have been around for years, but the competitiveness and interest in the PHIX market has increased as large consultancies have jumped in with their own exchanges to ensure a future revenue stream by competing against the public exchanges. Brokers and carriers are following quickly and the once quiet exchange market made up of technology companies and independent private exchanges is getting very crowded. But the interesting thing is that each of these exchanges can meet the very diverse needs of employers. Its not just about moving towards a defined contribution and getting out of the business of providing health benefits, but can mean a reinvestment in benefits by creating real choice, enabling consumerism, and building on effective cost management strategies -- or anything and everything in between.
Oh, and while making sure you understand the value proposition of the various exchanges (and they are changing / evolving) so you can understand which might best meet your needs, make sure you understand the revenue stream, because it can be very convoluted.