Reform

Private Exchange Simulation

The private exchange simulation allows payors to better understand their employees’ behavior and preferences. This tool simulates a defined-contribution environment in which group-insured employees are given a fixed sum of money that they can use to purchase a range of major medical and supplemental products in an online market. Thus, the simulation allows users to:

  • Assess employee preferences to buy up or down (compared with their current level of coverage) and their willingness to spend more or less than the defined-contribution amount
  • See what types of consumers purchased which categories of products and whether certain categories of supplemental products are more valued than others
  • Understand employee preferences for product breadth versus payor breadth within a private exchange
  • Allow payors to create and test bundles of major medical and supplemental products that are based on value

The “real” consumer feedback gives users unique insights into consumer preferences and what their behavior on the private exchanges is likely to be. A payor can then use these insights to create or refine its private-exchange strategy because the information helps answer such questions as: Should the payor create its own private exchange or participate in a multi-payor private exchange? What types of supplemental products should it offer on the private exchanges, and what should its total portfolio of products on those exchanges include? What type of bundling strategy should it consider?