The Uphill Task of Enrollment in Private Exchanges

Starwood Hotels & Resorts Worldwide Inc.’s recent announcement it would shift 26,000 US staff and their dependents to Towers Watson & Co.’s One Exchange demonstrates private health insurance exchanges’ continuing success at attracting employers with the promise of cost savings and more choice for employee benefit decision-making.

But the growth in these marketplaces will only meet robust expectations of many in the industry if and when employers can count on sustainable cost reduction. This will likely happen over the next five years, according to Ashish Kaura and Jay Godla, both partners with Strategy&, who spoke on April 21 at the AIS webinar, “Private Exchange Strategies: What’s Working Today? What’s Next?”

Working off the premise that the market is still in a learning phase, the pair said large employers especially are trying to figure out which, if any, exchange model offers the right strategy and real cost savings. Exchanges already offer employers a selection of health plan product designs and “pre-shopping” or product set-up services, Godla said. Employees are also able, through a multi-carrier or single-carrier exchange contracted by their employer, to buy coverage and enroll.

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