Are You Ready? Private Health Insurance Exchanges Are Looming Accenture Research shows: By 2017, nearly 1 in 5 Americans will purchase benefits from a health insurance exchange, yet consumers are unaware and ill prepared

Considerable attention has been paid to the In 2017 approximately 18 percent of the A private (health insurance) state health insurance (public) exchanges American public will purchase insurance exchange is an online benefits created by the Patient Protection and through exchanges, radically transforming marketplace that lets individuals Affordable Care Act. These public exchanges the health insurance landscape. shop for insurance products will expand and standardize coverage for an Private exchanges facilitate employers’ 1 including health, dental, vision, estimated 30 million individuals by 2017 . move to a defined contribution funding life, auto and home. Typically an However, this transformation is also paving strategy to better manage future cost the way for the rapid growth of another trends and offer employees greater choice, employer will provide a “defined quietly emerging channel. Private health flexibility and a retail-like shopping contribution” (e.g., $5,000 that insurance exchanges have been incubating experience. While the market has remained works like a gift card) that can be for several years, but the accelerated fairly nascent with fewer than one million used to purchase products that best development of exchange products and enrollees in 2012, employers are expressing technologies has employers increasingly meet individuals’ needs, offering tremendous interest. Recent employer greater choice and flexibility re-evaluating traditional employee benefits. surveys indicate that more than 1 in 4 Private health insurance exchanges will employers are considering moving to a than traditionally available. rapidly upend insurance purchasing for private exchange in the next three to five many of the 170 million people who receive years2,3. Correspondingly, several benefits 1 Congressional Budget Office: Estimate of the Effects of the benefits through their employer. According consultancies—Aon Hewitt, Buck Consultants, Affordable Care Act on Health Insurance Coverage, February to Accenture research, private exchange Mercer, Towers Watson—and a number of 2013. 2 NY Times (2/28/13): According to Aon Hewitt’s survey, about participation will approach public exchange health plans are launching private exchanges 28 percent plan to move into a private health care exchange enrollment levels as soon as 2017 and to meet this expected demand. over the next three-to-five years. surpass them soon thereafter. The result: 3 Wall Street Journal (4/15/13): “With 56% of employers considering a private exchange to provide benefits to their active employees or retirees, the transformation of the US health care landscape is well underway,” said David Rahill, President, Health & Benefits, Mercer.

Accenture: Insight Driven Health Public vs. Private Exchange Annual Enrollment enhanced experience, yet also creates equally tremendous risk as dissatisfied consumers 50 Public Exchange Private Exchange will blame plan sponsors. The majority 40 of survey respondents remain wary that 40 firms are merely looking to shift costs to 30 30 31 employees—a notion that employers should 30 27 quickly work to dispel.

19 Rapidly expanding private exchanges will 20 15 increasingly enter c-suite conversations.

Enrollment (millions) Adoption has accelerated substantially, and 9 9 10 will continue to do so as public and private 1 exchanges demonstrate legitimacy and early 0 vendors mature their offerings. However, 2014 2015 2016 2017 2018 this velocity of change will surprise a largely Source: Private Exchange: Accenture analysis, based on data from: U.S. Census, Bureau of Labor and Statistics, Kaiser Employer unaware consumer population. This may Health Benefits 2012 Annual Survey. Calculations exclude post-65 retirees and individuals. result in negative consequences for those Public Exchange: Congressional Budget Office 2013 Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage, CBO’s February 2013 Baseline, depicts average monthly enrollment, including spouses and dependents for individual who lack the education, support, and tools and SHOP. required to effectively manage increased responsibility for personal health care risk. Let the buyer beware Respondents are attracted to choice, Effectively addressing this latent demand flexibility, the personalized product selection While private exchanges may be top and supporting consumer success are critical and the shopping experience. In fact, the of mind for employers, employees are success factors for aspiring market leaders. majority of respondents are even willing to largely unaware of this emerging model. share personal information about themselves According to a recent Accenture survey and their families to receive personalized For more information, contact: of 2,000 US consumers, 83 percent of recommendations through the platform. consumers are entirely unfamiliar with the Richard Birhanzel This latent employee demand will further private exchange concept. A similar lack of [email protected] accelerate private exchange adoption. awareness exists about public exchanges4. Scott Brown This lack of awareness is pervasive across all Private exchange providers have been [email protected] demographic categories. largely focused on educating employers of Joshua Tauber the concept’s benefits. However, private Widespread employer interest paired with [email protected] exchanges will shift considerable financial markedly low consumer awareness suggests responsibility to employees, expanding there may be material, latent demand for choice yet requiring users to become 4 Kaiser Health Tracking Poll: March 2013 finds a majority of the private exchange model. Accenture superior individual risk managers. This Americans are unsure of how the ACA will affect them. While research revealed that once presented with 58% of respondents in this poll said they understood that creates tremendous opportunity for carriers, exchanges are a provision of the law, this level of awareness the concept, 85 percent of those surveyed brokers and employers to take credit for an declined from 62% in an April 2010 poll. http://kff.org/health- expressed a neutral to positive outlook. reform/poll-finding/march-2013-tracking-poll/

Methodology Accenture: Insight Driven Health About Accenture

Accenture conducted an online survey of 2,000 Insight driven health is the foundation of more Accenture is a global management consulting, consumers in the United States. The survey assessed effective, efficient and affordable healthcare. That’s technology services and outsourcing company, with consumers between the ages of 18 and 64 who why the world’s leading healthcare providers and approximately 261,000 people serving clients in receive health insurance through their employer or health plans choose Accenture for a wide range of more than 120 countries. Combining unparalleled other affiliation, their significant other, or individually. insight driven health services that help them use experience, comprehensive capabilities across all The research was conducted in March 2013. knowledge in new ways—from the back office to the industries and business functions, and extensive doctor’s office. Our committed professionals combine research on the world’s most successful companies, real-world experience, business and clinical insights Accenture collaborates with clients to help and innovative technologies to deliver the power of them become high-performance businesses and insight driven health. For more information, visit: governments. The company generated net revenues Copyright © 2013 Accenture www.accenture.com/insightdrivenhealth. of US$27.9 billion for the fiscal year ended Aug. 31, All rights reserved. 2012. Its home page is www.accenture.com.

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