Second of a two-part series
Much like
Look before you leap.
That's the advice many industry analysts and experts are giving credit unions that are considering offering health insurance through private exchanges.
And a big reason for that is CUs must ensure the exchange they offer, especially if it has a very large or national footprint, delivers coverage in their area that includes the right carriers to allow most members to keep their current physicians and hospitals.
"It's all about minding your store," said Annette Bechtold, SVP of regulatory affairs and reform initiatives for health benefits advisory firm Digital Insurance. "Credit unions that want to offer an exchange have a responsibility to fully vet the exchange, and understand the unique needs of their members. They don't want to mislead people into purchasing something that does not work for them."
Bechtold noted that with the growing number of private health insurance exchanges, health insurers will likely be reluctant to participate in all of the offerings, due to the time and cost it takes to have computer systems link up with an exchange. "Carriers have to decide where they want to dedicate their resources."
Jeff Chesky, CEO at Insuritas, which offers a range of insurance products to CUs to deliver to members, says health insurance exchanges are a risky move right now. The East Windsor, Conn.-based Insuritas does not offer health insurance.
"Private health insurance exchanges face two major challenges: delivering the right consumer guidance and offering the right coverages and services," Chesky said. "It will take several years for regulators to agree on the right education strategies, and the patchwork of healthcare products and services available to exchanges today will go through several generations of risk re-engineering before they get it right. CUs should be very thoughtful about exposing their brand equity to this type of reputation and execution risk."
Chesky said if credit unions are seeking new avenues for fee income there is much "lower-hanging fruit... such as property and casualty insurance that come with none of the reputation, execution and delivery risks of health insurance."
Reinforcing The Member Relationship
But most experts don't see fee income as the reason credit unions will provide members with health insurance.
Instead, this product should be viewed as a way to build deeper member ties and solidify the CU's role in the community as a trusted advisor.
"For credit unions, the health insurance exchange is about reinforcing the member relationship and further showing the credit union is a full-service provider that wants what's best for the community," said Andrea Dickinson, member outreach coordinator for the Iowa Credit Union League. The league has signed up 46 credit unions with CoOportunity Health, and is pleased with that figure.
"The money a credit union makes from each policy sale is not a lot — a nominal referral fee," Dickinson said.
CU Benefits Alliance in Salem, Ore., a CUSO owned by 38 credit unions, last month launched myCUexchange, a private health insurance exchange for CU members and employees. John Harris, CEO of CU Benefits Alliance and CU Insurance Alliance, said the job of the exchange, as well as participating credit unions, is to "get the word out." Harris explained that credit unions aligned with myCUexchange earn about 10% to 20% of the commission generated from a policy sale.
"To me, the reason credit unions want to offer the exchange is that a lot of members in the coming year are going to get pushed out into the individual health insurance market, due to a job loss or their small employer discontinuing their plan," Harris said. "Members are going to have to figure out what to do and the credit union will be right there to help."
Some industry experts see offering members health insurance as another way to strengthen relationships, especially with young adults.
But experts also predict more speed bumps ahead for the health insurance marketplace this year, which could further affect consumer perception of the new healthcare system and the performance of public and private exchanges. Bechtold predicted that after the ACA open enrollment deadline, which for some individuals now extends into April, there will be after-effects.
"The White House says 7.1 million people enrolled in healthcare.gov, but that does not mean 7.1 million people will pay their premiums," Bechtold noted. "Some estimates indicate that 20% of the people who enrolled won't ever pay their premium."
She said, too, that many Americans signed up for coverage without knowing what they were really getting. "Already there are tons of cases where people have signed up for plans that offer no healthcare networks where they live — no doctors or hospitals. All of these repercussions, how will they affect things going forward? I think we will see fallout from open enrollment."
The $245 million Peach State FCU in Lawrenceville, Ga., is offering Credit Union Exchange Blueprint, a health insurance exchange delivered by EPL in Birmingham, Ala., a CUSO owned by 10 credit unions.
Branded as Peach State Insurance Marketplace on the CU's website, the product has not drawn a lot of member attentionyet,
Five credit unions had signed on with EPL to offer Credit Union Exchange Blueprint as of the March 31 deadline and 117 members had enrolled, according to Bruce Clapp, EPL's chief marketing and sales officer.
Clapp predicted, however, that as consumer and credit union knowledge of the exchanges grows, so too will interest. He expects EPL will see a five-fold increase in the number of CUs offering Credit Union Exchange Blueprint over the next three months.
"The ramp-up is taking place. People now know that healthcare reform is real, deadlines have come and gone, and individuals are signing on. We are getting a lot more calls every day," said Clapp, pointing out that many employers renewed their plans early last year to avoid the March 31 deadline and gain more time to make decisions on healthcare offerings.
Bechtold, too, thinks the exchanges will eventually flourish.
"These are just growing pains," she said.
