When former President Barack Obama approved the Affordable Care Act in 2010, the insurance industry was shaken up. Brokers and consultants across the nation who had been in denial about the law's ability to pass were faced with the harsh reality that it was here to stay.

Not long after, private exchanges started to create a stir and the opportunity to deliver insurance via new mechanisms was the talk of all the major industry stakeholders. Accenture and Oliver Wyman predicted 40 million users would receive health insurance though private exchanges by 2018.

They seemed to be onto something.

Companies like Sears Holdings, Darden Restaurants and Walgreens were jumping on board with Aon's Corporate Health Exchange, Petco and Kinder Morgan were on the Mercer Marketplace and Xerox, Arby's and Bob Evans Farms were on Buck's RightOpt. All these big players in the insurance industry were leading the pack.

With all this talk about private exchanges and companies like Liazon blazing the path for pre-packaged employee benefits, the 40 million mark didn't seem so farfetched.

Fast forward to 2017, and here we are with 8 million people in the United States enrolled in a private exchange for the 2016 benefit plan year. Ouch. Someone's predictions were a bit off.

Accenture is still optimistic that the numbers will grow, but the deceleration in adoption is not surprising. When I spoke at the Private Healthcare Exchanges Conference in 2014, I warned the audience to be wary of the large numbers and predicted that most employers would take a “wait and see” approach.

My organization, ebenefit Marketplace, cut its teeth with private exchanges and the anticipation that employers would adopt the concept as a creative mechanism to deliver employee choice and obtain cost control. We operate in what is considered the mid-market sector, defined as 100 to 2,500 employees.

Do you know how many calls we received for a private exchange in 2016? Zero. That is a bit different than the requests we received for customized benefits technology in the 4th quarter of 2016, where we implemented 52 new employers (average size 300-400 employees) that were either using technology for the first time or switching from a technology that wasn't meeting their expectations.

For years, I have been saying I should have trademarked the phrase Private Exchange-ish. That is exactly what employers are looking for. Today, we see more employer groups ask for the things that made a private exchange attractive: employee choice, multiple funding options, decision support and simplified administration. When you tie in ACA tracking, wellness, advanced reporting, analytics and benchmarking, the traditional private exchange model falls apart.

In 2012, every broker I spoke to mentioned the word Liazon; since they were acquired by Towers Watson at the end of 2013, I haven't heard their name. Then it was Zenefits. Now it's Namely. Tomorrow, it will be something else.

What will not change is employers leveraging technology to make their lives easier. As this model evolves, change will continue to happen in the ways insurance is delivered. I have been in technology my entire career and one thing I can tell you is that technology moves at lightning speeds — which is the opposite of the insurance industry.

If you are an insurance broker or consultant reading this article and looking for a something to take away, it is this: Keep technology at the front of your organization. I see petrified small firms across the nation merging into larger firms because they lack the ability to adapt and change with the industry. Their numbers get larger, but the thinking of these firms stays the same. Twenty-four independent firms creating one large firm is still 24 independent firms that didn't have the resources to survive on their own.

Join me on April 11 at the 2017 BenefitsPRO Broker Expo during my session “Private Exchanges Aren't Working — Benefits Administration is Full Steam Ahead” to engage in an interactive discussion on what is working and what isn't working when it comes to benefits technology. I look forward to seeing you.

Instant Insights /

Raise your hand if you still want a private exchange

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