Private Exchanges 2.0: Can they convert people from informed purchasers of health benefits to engaged consumers of health care services?

By Barbara P. Gniewek (PwC)

Employers continue to struggle to control the cost of health care benefits, a struggle that has existed for at least the past 30 years, with a brief reprieve in the late 80s and again in the mid-90s due to someone named Hillary.  Even with many efforts from managed care, wellness, HDHPs and ACA, employers are still struggling to control health care costs with annual average cost increases between 5 and 10%.

While some employers have had more success than others in managing costs using traditional approaches, collectively they win/or lose every year at renewal time.  The corporate bottom line absorbs or passes on the cost increases, and our health care expenditures have swelled to about 18% of the GDP and are expected to rise to 20% in the next 5 years or so.  While we spend more than any other country on healthcare, we are ranked 27th of the 34 industrialized nations in terms of health care quality. As a citizen I know we have the, or one of the best health care systems in the world, we just don't distribute it equally, and our incentives are not aligned.  As an employee I'm insulated to the cost of care and I don't act as a consumer even though I have a high deductible plan.  I'm not engaged, and I know better.

So the newest solution for employers is private health exchanges, or those selling them would suggest (which is often the benefit advisor).  But the exciting piece of private exchanges is that they can have the infrastructure to really move people from informed purchasers of health benefits to engaged consumers of health care services.  That is a critical piece to change / challenge the current health care economy.  While today’s exchanges have some of the attributes for this transformation, the 2.0 version of exchanges will deal with care delivery, thru value based designs, out-comes based wellness, care management incentives, and true high performing networks will drive enhanced consumerism.  With these market changes, we can possibly change the care delivery system from treating illness to building / managing wellness, engaging people to better understand the impact of their lifestyle on their health, and how to manage their genetic anomalies.  This is how we might be able to finally bend the health care cost curve.

Exchanges are interesting for that reason, and creating a lot of buzz in the employer benefit space.  This is a big trend, and a disruptive influence for employer benefits to be sure, but may be what we need to bend the health care cost curve, a real game changer.