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HealthConnect Systems
• Health and Benefits Sales Automation
• Multi-Carrier Quoting – Primarily Small
Group and IFP
• Primary Clients:
o Agents
o General Agents
o Carriers
o TPA’s
Exchanges Overview
• Part of PPACA
• Opportunity for Agents/GA’s – Expansion of Market
• Projected payments to operate exchanges
o $1 billion upfront
o $3 – 5 billion annual recurring
• Attracting many players
o Government
o Commercial
• HealthConnect Systems
o Considerable time evaluating
o Fundamental positioning: Agent/GA friendly
Today’s Discussion
• “Nuts and Bolts”
• Agent and Carrier Survey
• Strategy Recommendation
o Agent
o General Agent
Nuts and Bolts
What is an Exchange?
A portal and call center established by each state
where individuals and small business can compare
and purchase commercial health insurance – and
obtain government subsidies to defray the cost of
the purchase.
• Creates mechanism to disperse subsidies
• Simplifies insurance options and creates
clearinghouse
• Aggregates individuals and small group
employees into a single risk pool
Exchanges are politically supported by both parties and was one of
the few non controversial items in healthcare reform
Why is an Exchange necessary?
How will an Exchange get set up?
How will an Exchange get set up?
State
How will an Exchange get set up?
Advisory committee - Interview stakeholders
- Recommend structure
State
How will an Exchange get set up?
Governmental entity - Operate Exchange
Advisory committee - Interview stakeholders
- Recommend structure
State
How will an Exchange get set up?
Hire subcontractors
Governmental entity - Operate Exchange
Advisory committee - Interview stakeholders
- Recommend structure
State
Government
Commercial
How will an Exchange get set up?
Hire subcontractors
Governmental entity - Operate Exchange
Advisory committee - Interview stakeholders
- Recommend structure
State
Happening
Now!
Sub-contractor
hired per RFP Government
Commercial
How will an Exchange be funded?
Exchange Operations
- Initial - Federal Government ($1 bil)
- Ongoing - 2.5% override from carrier
- Portion to subcontractors
- Exchange must be self-sustaining
after initial funding
Subsidies - Federal Government
Key Operational Aspects
- Call Center
- Portal
- Community outreach
What will an Exchange do?
What will an Exchange do?
1. Market to individuals/families and small businesses
(employers/employees)
- Direct (call center)
- Third parties agents
navigators (community outreach)
What will an Exchange do?
Key questions: - Services
- Compensation
- Plans/Rates/Benefits
1. Market to individuals/families and small businesses
(employers/employees)
- Direct (call center)
- Third parties agents
navigators (community outreach)
In versus out of exchange
2. Traditional GA functions o Work with agents
o Carrier submission
o Carrier interaction
What will an Exchange do?
1. Market to individuals/families and small businesses
(employers/employees)
- Direct (call center)
- Third parties agents
navigators (community outreach)
2. Traditional GA functions o Work with agents
o Carrier submission
o Carrier interaction
What will an Exchange do?
3. Additional functions o Subsidy
o Billing
o Technical: Single Multi-carrier
1. Market to individuals/families and small businesses
(employers/employees)
- Direct (call center)
- Third parties agents
navigators (community outreach)
Expected Timeline
1/1/14
Policy/committee
Legislation/vendor
discussions
RFP issue &
contract awarded
Implementations
Exchanges must
be operational
Soft launch
late 2011 mid-2012 mid-2013
How big is the opportunity?
Set up: $1 billion
Ongoing: $3 – $5 billion annual recurring
(25 - 40 million people and roughly $6 - $8 PEPM)
Who will operate the exchanges?
MMIS:
EDS (HP), ACS (Xerox), CSC
System Integrators:
Perot, Anderson
Call Center: Maximus
Eligibility: HMS
Other: Lots and lots
Government
Sales Automation:
HealthConnect Systems, eHealth
Benefits Administration:
Word & Brown, Ceridian, Digital
Insurance
Software: Microsoft
Others: Lots and lots
Commercial
QUESTION:
As an agent, what should I do about Exchanges?
Agent Goals
• Maintain current distribution system
• Don’t disadvantage current system versus exchange
o Mandates/consumer protections
o Plans/pricing
• Role for broker in the exchange system
o Sales/service
o Same compensation in/out
Agent Positioning – Key Points
- Exchanges offer subsidized commercial health insurance
o Distribution and services dominated by experts (Group – 90%, IFP
– 70%)
o MMIS/government contractors have limited/no experience with
small group and IFP
- Exchanges must be self-sustaining (after initial Federal funding)
o They must work!
o Need balanced risk pool (agent compensation)
- Success/failure of Exchanges will be highly (politically) visible
o Membership/uninsured number disclosed
o Constituent use of Exchange
o Health insurance is an experience (versus search) good
o Local servicing vs. government call centers
QUESTION:
As a General Agent, what should I do about Exchanges?
GA Positioning
Key Challenges
• Policy makers have a poor understanding of
the key role played by general agents.
• Companies most likely to operate exchanges
view GA’s as competitors
• Compensation (initial versus long-term)-
Exchange operators initially plan to bid cost to
operate exchanges at a very low rate.
Key Structure
Traditional
GA
Functions
• Work with agents
• Case submission
• Carrier interaction
Other - Billing
- Subsidy/eligibility
- Technical (single multi)
Exchange Operations
Key Structure
Traditional GA
Functions
• Work with agents
• Case submission
• Carrier interaction
Other
- Billing
- Subsidy/eligibility
- Technical (single multi)
Exchange Operations
Have state/government
entity allow for multiple
general agency servicing
entities!!
How will an Exchange get set up?
Hire subcontractors
Governmental entity - Operate Exchange
Advisory committee - Interview stakeholders
- Recommend structure
State
Happening
Now!
Sub-contractor
hired per RFP Government
Commercial
BUT…
Exchange Operations
Traditional
GA
Function
Other
Initial total compensation –
$6 - $8 PEPM*
* This is NOT a typo!
