Category Archives: Private Exchanges

False Perception of Private Exchanges Causing Problems for Brokers


Private Exchanges are still in the news with firms like Time and Walgreens  moving some employees or retirees to Private Exchanges. Some polls still claim that Private Exchanges will dominate the market in a few years. Yet I would contend that most people still don’t know what a Private Exchange is. I have written my perspective on this in previous articles on this blog. Regardless of what one would define as a Private Exchange what really matters is what employers think it is. While brokers may not believe Private Exchanges may take hold or they do need to compete with the idea or a Private Exchange and more important the employers’ perception of what a Private Exchange is./

I have given speeches about Private Exchanges at many employer conferences. One of the first slides I show is a study that claims that 70% of employers would be interested in a Private Exchange. Yet when I ask the audience what they think a Private Exchange is few know. What is more interesting is that when I sat with a group of employers they spoke about what they hoped it was. The most common answer was that they thought a Private Exchange would get them out of the health insurance risk business. Those employers with over 100 employees that are experience rated simply wanted out. They were hoping this is what a Private Exchange was. Some were disappointed when they found out that Private Exchanges did not deliver this.

These employers are more than willing to give employees money for health insurance. What they would prefer though is that they can just give them money and let them worry about things. They don’t want to worry about whether they just hired a person with a spouse or child that has some major medical condition. They don’t want to worry about helping manage catastrophic claims or running wellness programs. They don’t want to deliver the bad news once a year to employees that their costs are going up or their plan is changing.

So while brokers may or may not believe in the value of a Private Exchange, they do need to worry about other brokers who aggressively market Private Exchanges because employers who think they can get out of the medical insurance “risk” business will take the call and schedule a meeting. It is the employers’ perception that is the key.

Brokers need to engage their clients in a conversation and educate them as to what a Private Exchange is and isn’t. You don’t need to spend money with any vendor to be able to engage your clients in a conversation about Private Exchanges. In fact you don’t need to spend any money at all to offer one. What you should keep in mind though is what these employers may be looking for. I believe that the brokers or carriers that can deliver a solution for larger employers that can get employers out of the risk business will capture a market opportunity that few have yet to recognize. The opportunity is there. Who will act first?

Webinar Invite – Upping the Benefits Game – Introducing Ideas Most Brokers Aren’t Thinking About


I am conducting a webinar for benefits brokers that you may be interested in. This addresses many of the recent events in the benefits business and incorporates some of the content previously published on this blog. Between what Willis has done and Aetna there is a lot to discuss.

The webinars are on July 8, 13, and 21st from 12-1 est. to register click on this link to my website.

http://www.hrtadvisors.com/AboutUs/HRTWebinars.aspx

Here is some of the text from the invite.

How would brokers react if the entire small group benefits market went fee for service like Aetna is doing? What would the market look like if an individual health insurance plan became tax deductible? HR Technology Advisors would like to invite you to a webinar that will introduce what we think are strategic business decisions that brokers can make today that will position their firms for a much different benefits world. We can assure you these ideas are things most brokers are not close to thinking about that can give you a competitive advantage today while preparing your business for the future.

Feel free to call me if you have any questions at 508-530-5043.

An Alternative Approach to Private Exchanges


Note: This was published in December 2012 but never on this blog.

It seems like there is not a day that goes by where one does not see a press release about some broker, technology company, or carrier, launching their version of a Private Health Insurance Exchange. As someone who regularly speaks with staff from these companies any discussion inevitably turns to Private Exchanges. What I have learned from these conversations is that there really is no clear definition of what a Private Exchange is. The term Private Exchange is so loosely used in the market that it seems anyone can put out some press release about a Private Exchange with no need to define what it really is or even more so, why it is something that is good for the customer. These press releases have created such a buzz in the market that many brokers feel a need to respond quickly with their version of a Private Exchange regardless of what it is or if it has any value. This article will give another perspective and ask some very pointed questions that I think the reader should contemplate. In the end I will suggest new ideas that may give you a marketable alternative position on Private Exchanges. Lastly, this article is my perspective on Private Exchanges. This does not represent the position of my company, HR Technology Advisors, at this time.

Over the past 14 months I have attended two conferences where there have been panel discussions about Private Exchanges. On these panels were representatives of a carrier Private Exchange company, technology vendors, actuaries, brokers, and consultants. The audience consisted of close to 100 insurance brokers. The purpose of the panel was to discuss and conclude where we think the Private Exchange market was going. On both occasions one of the first questions asked was:

“Do you consider a single medical carrier with multiple options and Exchange?”

The universal answer was No. One medical carrier with multiple options sold in conjunction with other coverages each with multiple options is what we called a cafeteria or flex plan in 1988. Such a plan would have a defined contribution from the employer in which the employee can spend as they wish to purchase various benefits. The difference between now and then is that technology is available today to help guide the employees through their decision process and enroll employees online.

From an underwriting standpoint giving people options to choose plans that fit them just invites the same problem it did in 1988, adverse selection. I remember back then we sometimes would worry about adverse selection when there were hired enrollers who could help the individual choose the best plans for them. Today, the online decision support tools provide the same assistance. The problem with both is that if everyone chose what was best for them there would be adverse selection which generally worked against the goal of the employer which was to reduce costs or keep them from growing too quickly. This is all assuming the client is experience rated.

Some Private Changes may be underwritten as multiple employer groups. If this is the case then it is the insurer that needs to worry more about adverse selection. Such pools would need to include large populations in order to spread the risk of adverse selection. In these types of insurance pools employers would not be able to self-insure. Ultimately the price of such plans will reflect the experience of the group preventing people from “gaming” the system for too long. In states like my home state of Massachusetts laws already exist that require insurers to pool their risks for the less than 100 employee marketplace. In these states Exchanges can be more easily created because the insurance products are already underwritten in bigger pools.

Other Private Exchnages are created for larger employers (2000+ employees). These Exchanges may have multiple medical carriers with multiple options each. In these situations employers are often self-insuring and therefore need to once again pay attention to the spread of the risk.

Regardless of how the risk pool is created there doesn’t appear to be any real cost savings from Private Exchanges other than cost shifting back to the employee. The idea being sold in this model is that the employer could pass on future insurance rate increases to the employee. From a pure insurance perspective the game of trying to find a better risk pool continues with Private Exchanges. In today’s market most Private Exchanges have only one medical carrier and most are underwritten on the single employer level or large pools for small group in existing small group reform markets.

Exchange Technology

Another conclusion from our two panel discussions was that for employer sponsored plans the technology used to purchase products from an insurance exchange should be viewed separately from the actual insurance products. Most of today’s Private Exchanges package the technology with the insurance products in advance. In my opinion this is not a good solution for the employer or the employee for several reasons. They are as follows:

  1. Current Private Exchanges appear to be charging excessive fees for the technology. While the average benefits enrollment system costs $2.00 – $4.00 PEPM Exchange technologies have been seen to charge $6 – $10 PEPM. In the short term these higher prices may be sustainable but I believe within the next 12 months these prices will come down substantially. Wouldn’t it be better if the employer could shop the insurance plans separate from the technology to keep them both competitive?
  2. This practice of packaging technology with the insurance products is also not “employer friendly” from an administrative standpoint. If I am an employer and I am already using some enrollment system or maybe even a more robust system that integrates HR, Benefits, and Payroll would I have to stop using my existing system to buy into one of these Exchanges? How would I now automate payroll deductions? As an employee would I now have to log into one system to see my payroll and request a vacation day and now another to enroll in benefits? From my perspective this would be moving employers in the exact opposite direction of where they are trying to go with their internal HR- Benefits – Payroll technologies.
  3. What happens if I want to switch my carriers? Do I lose my technology and therefore have to go through the whole process of setting up a new system. Employers change insurance more frequently than they change technology. Changing technology is a much more difficult process. To put the two together only creates more problems for the employer. Employers are already understaffed in their HR Departments. To add more of a burden administratively at this time is not a good idea.

One question I would ask any carrier that is offering products in a Private Exchange is whether they would offer the same products on some other technology platform. Are insurance companies going to limit their distribution to a single technology vendor? This may make sense for the less than 50 employee market but does not make sense for the 50+ market. Think of this for a moment. Two companies, ADP and Paychex, control close to 75% of the benefits enrollment technology market that integrates with their payroll. Are medical carriers going to ignore these companies when they have such a presence in the market? If I am ADP and you start replacing my benefits enrollment business I am going to take action.

As a broker do you think selling a Private Exchange to an employer and requiring they use the Exchanges technology is good advice? A unique position in the market would be to help employers use either existing technology or offer a more robust technology (with HR and maybe Payroll) rather than force them into either a new or limited capability system. This does not mean an employer will never purchase a Private Exchange with proprietary technology. If they want one, call then vendor up and see what they have. Employers simply should be aware of all the options and any implications resulting from their purchase.

One final thought about this concept of a Private Exchange really has to do more with where the market is going. I would imagine every insurance company is in the process of developing their plans on how to participate in a Public Exchange. We are just months away from every company having to have some solution if they are going to participate in insuring this large number of new customers that President Obama has promised. Health Care Systems are also making plans for this new health care world. Would it be wise for a small to mid-sized employer to move into a Private Exchange at this time when within the next 6-12 months there may be a wide range of new products available? It will be interesting to see who is encouraging a move now versus waiting to see what the insurance world will bring.

In summary, while many in the business are running around creating Private Exchanges I suggest there may be a better alternative position. First, separate the technology from the products. Ask insurance companies if you can use their products on other technologies. Second, advise clients about what is really going on in the market. Do you advise an employer to make a change now? Do you understand the technology they are using to manage benefits today? Would a change be disruptive? Third, understand the technologies that have the capabilities to manage these exchange offerings. Can they manage a defined contribution plan? Do they have Decision Support tools? Do you know the capabilities of firms like ADP and Paychex? What other solutions are in the market and what do they cost? In the end a more educated approach to the market should make any broker a more valuable resource to their clients.

The Benefits Technology Arms Race Continues


When I started in the benefits technology business in 1997 I was given some advice and that was, “You can’t win or stop a technology war.” It was only a few months later that I saw my first demonstration of an online benefits enrollment system on a 28.8 dial-up modem. It was a nice system but it was painfully slow. It was also the first time a sales rep gave me the pitch that if brokers would give their system away the brokers would have a competitive advantage. “Sign up with me and you will get business easily” was the claim. Here we are 17 years later and just the other day a broker told me how he was paying a technology vendor $1000/month for the right to sell their system only to find that it really was not a differentiator. In this article I will give benefits brokers advice on how to win the game by exiting the technology arms race and save some money too.

The arms race really picked up from 2001 – 2006 when benefit websites became the new thing to “give away”. Benefit websites were easier and cheaper so everyone could easily buy them and build them. Some brokers were paying in excess of $100,000/year for websites when similar solutions were available for less than $10,000. It didn’t matter. If a broker could save or win business with some solution it was worth it. It was easy so everyone did it, until everyone had them. And websites no longer helped brokers get new business.

Some vendors would make the pitch “if you don’t partner with me I will sign-up your competitor around the corner and you will lose”. Others promised to limit the number of brokers per market until the limit kept on growing and growing until every broker in the market had the same thing. So what the brokers thought they paid for, a competitive advantage, wasn’t different after all.

What was interesting about the whole benefit website trend was nobody was asking for benefit websites. And after the brokers built them few employees used them. The reason why is because few people use their benefits in a given year in a way where they would need to look up some information on the web. So the money was spent, the websites built, only to be taken down after years of payments and little utilization. Some brokers did get clients from a fancy website. Imagine losing a $30,000 revenue client to a website that nobody used that had a street value of $500/yr. It was an uneducated market back then.

The arms race continued though. Next in line were benefits enrollment systems that started taking off in 2006. The bar was raised. These systems are more expensive and more complex than content websites. They do have greater value and people do use them. But brokers were spending much more money and dedicating more internal resources to compete with other brokers. It has become expensive.

Last year there was a sprint to have Pay-or-Play calculators with brokers racing to get their press release out that they had one. Imagine a press release to announce that you essentially had a nice Excel Spreadsheet. And now we have Private Exchanges. Brokers are once again spending tens of thousands of dollars for something we aren’t sure many people want. Let me give you some advice here. You can get access to three private exchanges for less than $5000. I put in a Private Exchange for an employer in 48 hours with a few phone calls and no upfront spend on technology. I don’t really know what a Private Exchange is but I do have three of them.

Now you have a firm like Zenefits “giving away” what is essentially an HR and Benefits system with onboarding capabilities. They weren’t the first to give away something beyond benefits. But they are marketing this like crazy. And the technology arms race continues with brokers looking to offer what Zenefits is offering.

The vendors do make some big promises. I had one sales rep that said he had the best enrollment system in the market. I told him to look in my parking lot and tell me how many Ferraris were out there. Everyone doesn’t buy the best. And we all know that 6 months from now someone will be better.

So what should a broker do? I have a few guiding principles including:

  1. You need to understand the market so that you feel secure with your strategy and decisions. If you don’t know the market you will fall for some sales pitch that does not improve your position in the market.
  2. Understand you can’t win or stop the technology. Whatever you have today won’t be the leader in six months.
  3. The technology will be the commodity in the end. Enrollment systems are already all looking alike.
  4. You can make a difference by improving your services around the technology. You are there to help the client not some technology vendor.
  5. Recognize everybody doesn’t buy the best. So don’t keep looking for the diamond in the rough. You will find more rough than diamonds.
  6. Cheap is often cheap. So if you can afford to give it to everyone it probably isn’t that good.
  7. Don’t hitch your wagon to the wrong horse. I have had brokers tell me, “I have a 3-year contract with this vendor so I am all set.” The market doesn’t care what you bought or if you made a bad purchase decision. You don’t want to be going to the market with yesterday’s idea or a bad solution.
  8. Employers have different needs. They all don’t buy the same health insurance and they all won’t buy or want the same technology.

This benefits technology arms race is fueled by a benefits broker’s desire to have something different or the latest and greatest of something. Many are looking to buy a competitive advantage. The vendors know this and pit broker against broker. Don’t buy it. The vendors call on everybody. They have to or they won’t survive. There are better ways to differentiate your business from others but the technology deal from some vendor is not it. As I have stated in the past, if you want to be different and create something great, start looking on the inside and not out.

Here is What a Private Exchange Is and Isn’t


Over the past 9 months I have been speaking at conferences or sitting on panel discussions where the topic was Private Exchanges. In some cases the audience consisted of employers and other times the audience was filled with benefits brokers. On each occasion I asked the audience the question, “What is a Private Exchange?” In all circumstances there was never any agreement on what a Private Exchange was. Yet in my presentation I highlight several studies one which says over 70% of employers would consider switching to a Private Exchange. I am wondering what these employers thought a Private Exchange was when they were answering the question. Seventy percent of employers want something that nobody can agree on what it is. And just the other day I was asked by a broker if I could help them respond to an RFP where the employer was asking if the broker (who is supposed to be an independent advisor) had a Private Exchange.  I can’t imagine what response we would get if we asked the employer to define what they meant by a Private Exchange? I think if the broker asked she would not get the business so I did not advise she ask. What I do know, whatever a Private Exchange is, the broker needs to have one. Maybe she will have a better chance to get the business if she had 3 or 4 Private Exchanges. Who knows?

So I am going to define what a Private Exchange is and isn’t. Maybe it will start right here where we all will begin using the same language to describe what these new benefit offerings are or aren’t. One may ask who anointed me the king of defining this. My last name is not Webster (as in Merriam Webster Dictionary). Nobody anointed me. But if no one is going to take the lead why not me. I don’t have a horse in the race. I am not a broker, not an insurance company, and not a technology vendor wanting to promote my technology. I also don’t sell insurance to employers. So I have no vested interest in whatever Private Exchanges are. I will say that I do understand the technology as that is my business. And I know what Defined Contribution and Cafeteria plans are as I sold them in the late 80’s. So I do have some knowledge in the area.

I am going to keep this simple. To me a Private Exchange is intended to be a Private version of a Public Exchange. The entire US population is being educated by the government, media, and other interested parties about what an Insurance Exchange is. To take the word Exchange, and make it something different from what the populace is being told an exchange is, I will say is somewhat “deceptive”. In fact, when I do ask employers what a Private Health Exchange is they usually describe it as a marketplacewhere an individual can get access to a wide range of health insurance options from many insurance companies. In my personal life I think of an Exchange or Marketplace as someplace that has many options from many companies.  I know the difference between an Apple Store and Best Buy. I know the difference between buying a product at the NIKE, SONY, or Apple website versus Amazon. And I know all you reading this do too.

So using this logic of the way the world understands the term Exchange or Marketplace then the majority of the Private Exchanges being promoted today by benefits consultants and brokers, insurance companies or technology vendors, are not Exchanges or Marketplaces. If there are not multiple products from multiple vendors available where the buyer is free to choose what they want from the menu then it is not an Exchange. Multiple products on a technology platform from the same company is not a Private Exchange. And I don’t want to hear the argument that they have Medical, Dental, and Life from different carriers. That is like saying you can buy a TV, stereo, and mobile phone from the same store but you only have one vendor option for each type of product. While there are some states where real Exchanges exist (CA and MD Small Group Markets) and they do exist for individual insurance, for the majority of the group market there are no Private Exchanges. You can offer more medical options and provide a different methodology to fund these options, aka Defined Contribution, but don’t call them Private Exchanges. You are confusing the buyers.

I’m pretty sure this article won’t stop those with agendas from calling these things Private Exchanges and I will have to advise my broker customers that they may have to play the game because they don’t make the rules, but hey, I tried.

For the Record – The HR Technology Advisors Position with ADP


In today’s business world getting your message out is both easier and more difficult. With the internet, Smartphones, Twitter, Facebook, LinkedIn, blogs, and more, it is really easy to publish your message for the world to see. You type, hit a button, and it is available to the world. In that sense it is easy to get your message out. It also easier for your competitors to get their message out. The hard part is getting anyone to listen and getting someone to find your message in a world of information overload. Whether you like it or not you have to play the game. If you don’t spread your message and define yourself others will and not always in the way you want. When that happens you will have to respond. Just look at the “noise” created during a Presidential campaign. The candidates spend as much time trying to define or label their opponent as they do defining themselves.

That gets me to the purpose of this article. I am about to launch a marketing campaign that I know will be misinterpreted by the market. Maybe saying misinterpreted is the wrong word because those who directly hear my message will more likely understand what my message is. What I do anticipate is that there will be noise created by others who do not hear my message that will misrepresent my message in the market. Some simply don’t want to take the time to listen and others may have their own agenda. This article is intended to clearly state my message for those that want to understand my position as it relates to this issue with ADP.

My firm, HR Technology Advisor (HRT), is launching a big marketing campaign highlighting how employee benefits brokers can leverage ADP to deliver a Private Exchange or Defined Contribution plan to the employer market. This concerns brokers because many see ADP as a competitor. Other technology firms who we do business with will not like it because ADP is a big competitor to them and I am promoting an idea based on a competitor. To many brokers, payroll companies, and HR and Benefits Technology vendors, ADP is arch-enemy number 1. As a consultant to benefits brokers and by extension an objective advisor to their clients when choosing technology, this “perceived” favoritism to ADP may not sit well. The key word is perceived. Let me get into the details.

At a high-level some people don’t understand the core purpose of my (our- Don Rowe is my partner) company, HR Technology Advisors. HRT is first and foremost a consultant to benefits brokers. Our job is to help benefits brokers understand how technology is impacting their business; how it will impact their clients HR and Benefits; know who the players are; and help position their firm competitively in the market. And then, as a paid representative of the brokers firm, we assist the brokers with direct client and prospect situations where we help them advise their clients on HR and Benefits technology and sometimes help them get prospects by participating in prospect presentations.

This is where ADP comes in. According to our statistics at HRT, employers are predominantly looking for technology that includes either HR and Benefits functionality or HR, Benefits, and Payroll in a single platform. Many have heard me say employers don’t want one system to track vacation days, sick days, and performance reviews; another to track benefits and enroll employees; and a third to process payroll. In fact, in 2013, close to 90% of the employers we assisted wanted a system that included HR and Benefits or HR-Benefits-Payroll all in one. And according to a recent market survey we did, ADP has a 46% market share of those employers using technology for Benefits Enrollment. Paychex was second with 29% and the next closest was 7%.  So whether a broker likes ADP or not the majority of any brokers’ clients are going to be using ADP as a tool to manage their benefits. It is not a broker’s choice as to what technology an employer wants to use to manage their HR-Benefits-Payroll. It is also not our choice at HR Technology Advisors. As a consultant to employers we work with ADP more than any other company because they have the largest market share. I equate this to the average benefits broker who may work with their local Blue Cross plan more than any other insurance company. They do so because in most markets Blue Cross has more than 50% market share. That does not mean the broker is solely a representative of Blue Cross nor are we only a representative of ADP.

As a consultant to brokers we use this knowledge to help our broker clients position their firm more competitively. While many brokers are running from ADP because they think they are a competitor (We addressed this in an article written in 2009 titled, “ADP – Friend or Foe” – download at www.joemarkland.wordpress.com ) we understand the value that brokers can bring their clients by having a service model to support those clients that have ADP or want ADP. Trust me, many clients need help with their technology and most brokers aren’t delivering the help. Here are a few questions I have asked brokers.

–          Have you ever helped your client test their ADP Benefits Enrollment System for accuracy?

–          Have you ever analyzed the pages employees would be accessing when enrolling in their benefits and see how well the benefits information is presented?

–          Have you ever uploaded a 2 minute video on the ADP platform that explains to an employee what Critical Illness Insurance is?

I have never had a broker answer yes to all of these questions. Helping clients with ADP is a service clients will value.

Now in 2013 Private Exchanges hit the market. Many brokers scrambled to sign-up with some benefits only technology vendors. At the same time we continue to engage clients who repeatedly tell us they want HR-Benefits-Payroll in one system. I found this conflict between what brokers were delivering  and what clients wanting to be very interesting so I wrote an article titled “An Alternative Approach to Private Exchanges” (also on my blog) and held webinars with the same title. In my article and on my webinar I predicted that ADP will be the largest Private Exchange technology vendor within 2 years. Not because I am going to make them but simply because more employers are using their system to manage their benefits than any other platform. So, as a consultant to brokers and employers I have helped employers figure out how to use their current ADP platform as a Private Exchange of Defined Contribution plan. Why? Because that is what employers wanted. They did not want to use another system simply to provide their employees with more medical options in a Private Exchange. So we worked hard with ADP to develop a model using third-party technologies, content from insurance companies, and internal programming resources to help employers leverage their ADP system as a Private Exchange. My marketing campaign is designed to bring our methodologies and message to the market so that employers can get what they want and the brokers that deliver this solution a competitive advantage.

I want to finish this by addressing the other technology vendors we have worked with at HRT. As I have stated we represent the brokers interest and by extension their clients. We have sold and implemented solutions from many vendors and there are many great solutions in the market. Yes, ADP has 46% market share, but they don’t have the other 54%. That being said I had one vendor ask me why I am doing this with ADP and not them. My simple response is because nobody asked. If a HR-Benefits Technology vendor does not offer the ability to administer a Private Exchange simply ask and I will show you how.

The Unintended Consequences of Private Exchanges for Employers


As I was preparing a presentation that I will be giving about Private Exchanges to an employer group in Charlotte and I had somewhat of an Ah Ha moment. I had been reading so much about Private Exchanges and had seen so many demos of Private Exchange technology that all the noise was kind of getting in the way of my own independent thoughts. I had to give an audience my view of Private Exchanges and I came up with several ideas one if which is my AH HA moment thought. So here it is:

“Private Exchange Technology and their Decision Support Tools may result in too many people choosing the wrong solution relative to what an employer may be trying to accomplish.”   

This is one of my thoughts so let me explain. One of the big benefits of moving to a Private Exchange is that employees will get more health insurance options. Rather than the employer choosing a one size fits all approach they will give employees a menu of options and let them choose from the menu.  And with those options they will provide technology to guide employees through the decision process and direct them to the solution that best meets their specific needs. The idea is that the low utilizers or healthy people will more than likely choose lower cost options while the older, higher utilizers will choose the higher cost options. This obviously assumes the lower cost options have higher deductibles, co-insurance and copays and maybe a limited provider network while higher cost plans will have lower deductibles and co-insurance and a broader network of providers. Thinking of it this way one needs to ask “Is this the employer’s goal.” It may not be. There may be unintended consequences associated with Private Exchanges.

There is a statistic by Dave Ramsey, the personal financial guru that says, “40% of employees admit that stress over money significantly impacts their work productivity”. There have been times in my life where that was true for me personally and I am sure I have employees who work for me today that would say the same for them. When it comes to employee benefits what do I want to give my employees? I would say one thing is “peace of mind.” Isn’t that what insurance is supposed to be? Try driving around in your new car without insurance and see how you change your driving habits. From my perspective an insurance policy is intended to protect a person or family from financial harm or ruin that could result from an unanticipated large expense.” The key word is “unanticipated”.

The other thing I want to do is protect them and their family from financial stress or ruin in the event of an unanticipated event. I buy them Life Insurance to help their family in the event of death. Disability to protect them from financial ruin if they are disabled. And I don’t want them to go bankrupt or become financially stressed from an unanticipated health event for themselves or a family member. Sure paying for office visits or dental is something in the insurance policies that I provide, but do I lose sleep because an employee may have to pay 50% for their kid’s braces on some 3 year payment plan. No. Or what if they have to pay $20 for an office visit. No. A couple going to the movies is more than $20.

One of the problems with Private Exchanges and or Public Exchanges is the focus on the little stuff. Look at all the chatter about ObamaCare. All we heard about was getting physicals paid and oral contraceptives paid for. Now that people are signing up for Public Exchanges we are beginning to hear about deductibles in to $4000 – $5000 range and out of pocket maximums in the $10,000 – $15,000 range. Is that what people need – free oral contraceptives and $10,000 Out-of-pocket maximums?

So now along comes Private Exchanges whose purpose is to give employees more options. These Private Exchanges come with Decision Support tools to help employees choose the right plan. They all ask employees questions like, “How many office visits do you expect in the next year”? Or “how many ER visits do you expect”? Are you kidding me? Who can predict the number of office visits or ER visits in the next 12 months? As consumers are we supposed to “time the market”.  And is “timing the market” what insurance is really all about? I recently saw a study from Intermountain Healthcare that says 90% of their highest claims from one year to the next are different people. I have personal experience where last year I had some issues to address where I did exceed my deductible but this year I hardly spent anything on health care at all. Who knows what next year will bring?

That gets me to the title of this article. Will offering more health care options with decision support tools result in employees “taking their eye off the ball”? Will employees take on risks they can’t afford? We are in an economic environment where a large percent of our population are living pay check to pay check. And we all know that many of the younger people don’t have the money in their banks to fund the costs of higher deductibles and co-insurance associated with lower cost plans.

Now I hear the naysayers already, “our decision support tool will not suggest that someone to take on a risk they can’t absorb”. However I have not seen any decision support tools ask questions like “Do you have $5000 in savings to pay for the costs of your deductible?” Most start with “How many office visits do you expect in the next 12 months?”

Now I realize health insurance is too expensive for many. Helping those with little money to save some money on health insurance is a good idea. That’s not the point of this article. My main point is that a possible unintended consequence of more employee health care options is exposing employees to financial risks they simply can’t afford. Is that what employers want when they provide insurance for their employees?