Employee Benefits and the New Health Care Landscape

Alan Cohen co-founded Liazon, operator of one of the industry’s leading private benefits exchanges for businesses of all sizes, in 2007. Liazon was acquired by Towers Watson, now Willis Towers Watson, in 2013. Alan has been a leader in the benefits space for over two decades. Prior to cofounding Liazon, he was CEO and cofounder of Online Benefits, one of the first web-based benefits technology companies in the United States. He led the company through its sale to A.D.A.M, a global provider of consumer health information and benefits technology solutions, and later served as president of A.D.A.M. Prior to cofounding Online Benefits, he worked in the insurance industry for Prudential, Mass Mutual, and Cigna and served as managing director for a division of Northwestern Mutual Life. Alan is often sought out for his insights on private exchanges, their role in the new health care landscape, and their effect on businesses. His expert commentary has appeared in Bloomberg Businessweek, Forbes, The New York Times, USA Today, The Washington Post, Yahoo! Finance, CNBC.com, and numerous benefits publications, including Employee Benefit News and Benefits Pro. In 2016, Alan was a recipient of an “Industry Innovator” award by the Institute for HealthCare Consumerism (IHC). IHC’s 11th annual “HealthCare Consumerism Superstars and Industry Innovator Awards” recognized the year’s top executives for their work in transforming the landscape of corporate health and benefits. In this book, Alan draws on his in-depth experience in the benefits industry to share how the key principles he used to create one of the first private exchange platforms over 10 years ago is still relevant to anyone interested in forging a better system for all. Alan holds a BA from Cornell University, an MBA from Columbia Business School, and an MBA from London Business School, where he won the Award for Academic Excellence. Alan resides in Westchester, New York, with his family and spends summer weekends in Woodstock, New York. The Cohens are avid skiers and outdoors people.

Introduction     1
Attracting and Retaining Employees     3
A New Paradigm Shift for Benefits     5
The Exchange Evolution     8
“Try It, You’ll Like It”     9
Overcoming the “Wait and See” Mindset     11

PART I:  THE CHANGING BENEFITS LANDSCAPE     13
Chapter 1  Building a Better Benefits System     15
Principle #1: Give Them Money and Let Them Shop     19
Principle #2: Provide True Price Transparency     23
Principle #3: Provide Meaningful Choice     24
Principle #4: Offer Guidance in the Form of Decision Support     27
Principle #5: Optimize the Shopping Experience     29
Principle #6: Ensure a Cultural Fit Within the Organization     33
Principle #7: Refine, Iterate, and Improve     33
Chapter 2  Benefits: The Accidental Entitlement     35
Not Really an “Exchange”     38
“Modern-Day” Insurance     40
Benefits as Compensation     41
So Where Does This Leave Us?     46
Brokers Join the Bandwagon     49
Chapter 3  They Don’t Know What They’re Missing: Flipping the Status Quo on Its Head     51
The Problem with the Status Quo     53
Disrupting the Status Quo     56
    Meaningful Choice     57
    Price Transparency and Defined Contribution     59
    Personalization     67
    Consumerism     70
Chapter 4  Making Sense of Benefits Solutions: Public Exchanges and Private Exchanges     75
The View from the Top: Public Versus Private Exchanges     75
Who Runs These Things Anyway? Types of Private Exchange Operators     79
    Pure-Play Providers     79
    Benefits Providers     80
    Benefits Advisors     80
    Traditional Benefits Administration Companies     81
What Should You Consider When Moving to a Private Exchange?     83
    Single- Versus Multi-Carrier Exchanges     83
    Self- Versus Fully-Insured Models     84
    Funding Strategies     86
Who Can Benefit from Private Exchanges? Markets Served     86
A Look at Products in Private Exchanges     89
What Else Can Private Exchanges Offer?     95

PART II:  STAKEHOLDERS: MAKING THE MOVE FROM “ONE SIZE FITS ALL”     97
Chapter 5  Employers Find Skin in the Game     99
A Big Bet Pays Off: TitleMax, Part of the TMX Finance Family of Companies     100
Customer-Focused Luxury Resort Gives Back to Its Employees: Sandestin     104
Chapter 6  Six Questions to Ask Before You Choose a Private Exchange     109
What Makes for a True Private Exchange?     111
    1 Is Elasticity Built into Its Foundation?     113
    2 Does It Include Decision Support and Educational Tools?     114
    3 Are Prices Transparent?     116
    4 Does It Integrate with Value-Added Services?     118
    5 Does It Provide Year-Round Support?     119
    6 To What Extent Does It Handle Benefits Administration?     120
Chapter 7  Brokers and Exchanges: Better Together     123
Rick Strater, Arthur J Gallagher & Co     127
    The Role of the Broker     128
    Overcoming Misconceptions     128
        Employees Don’t Care About Choice     128
        Cost Is All That Matters     129
        Defined Contribution Is “Cost Shifting”     129
Rob Harkins, Willis Towers Watson     130
    The Changing Role of Brokers     131
    How Can Brokers Win?     131
    The Role of HR     133
    Technology Is the Future of Benefits     133
Chapter 8  Insurers Find a New Way to Move Product     137
The Private Exchange: A Bridge to the Future?     139
What Insurers Can Gain from Private Exchanges     143
Innovators Embrace Private Exchanges Early On     148
    Jessica Moser, MetLife     148
    Kevin Hill, Oxford Health Plans/UnitedHealthcare     150
Insurers Aren’t the Only Ones Innovating     152

PART III:  FUTURE VISION     155
Chapter 9  Innovation in Benefits (Yes, Benefits)     157
Expanding the Aisles in the Benefits Store     163
Letting Individuals Create Their Own Preferred Networks     165
Creating a National Individual Insurance Market     169
Chapter 10  The “Law of the Land,” Insurance Tax Reform, and the November Surprise     175
“The Law of the Land…for the Foreseeable Future”     178
The Viability of the Individual Market     183
What Else to Note on the Legislative Front     185
    The “Cadillac” of Taxes—And Other Pending Legislation     186
    The Medicare Marketplace as a Model     187
    Small Businesses and Individual Benefits Marketplaces     188
    Tweaking the Tax Code     190
Chapter 11  Who’s Afraid of the American Consumer?     193
Some Potential Ways Forward     196
    Tax-Protected Savings Accounts     197
    Employer Funding for Individual Insurance     198
    Consumer-Centric Provider Networks     200
    Data and Digital Tools for Patients and Consumers     201
    Patient-Empowered Healing     204
The Utopian Vision     206
    Shopping for Care     208
        Using a Marketplace to Purchase Non-Emergent Health Care on an As-Needed Basis     209
        An “In-Network” Conundrum?     212
Final Thoughts     213

PART IV:  APPENDIXES: A PRACTICAL GUIDE TO PRIVATE EXCHANGES     215
Appendix A  Private Exchanges 101     217
Appendix B  Making Sense of Benefits Terms     223
Terms Related to Benefits     223
Terms Related to Health Care Consumerism     226
Terms Related to Private Exchanges     227
Guide to Common Benefits Products on a Private Exchange     230
Appendix C  Real-World Data and Applications     233
What Really Happens on Private Exchanges?     233
    Data from the 2017 Private Exchange Research Council (PERC) Analysis     233
What Do Employers and Employees Really Think About Liazon Exchanges?     237
    Data from the Liazon 2017 Employer and Employee Surveys     237
    The Exchange Experience: A Look at How Benefits Are Selected on Liazon Exchanges     240
    For the Benefits Geeks: A Health Care Timeline     246
Index     251