Private insurance exchange: Highmark takes the plunge with Array Health

When I was in Seattle on business a couple months ago I met Jonathan Rickert, CEO of an interesting company called Array Health. They are a start-up operation with aspirations to provide health plans with private exchanges that will give small businesses and individuals  access to several health plan and ancillary benefit designs rather than the few they are typically exposed to today. Health plans are interested in opening these exchanges in order to capture a higher share of the new members gaining health insurance as a result of the Patient Protection and Affordable Care Act (PPACA), which is rolling out through 2014. There will also be public exchanges, but the big plans would rather have customers shop within their own stores (think Apple Store v. Best Buy).This all fits in to an expected long-term shift from defined benefits to defined contribution that's likely to unfold in a similar fashion to what we saw in the pension market, which has shifted dramatically from defined benefit to the 401(k) model.The big health plans are still in the mainframe era and are not well placed to serve this emerging need. Of course they're also nervous about working with newer companies on a business critical process. That's why I'm so pleased to see Highmark Blue Cross Blue Shield announce its agreement with Array Health:

"We're bringing a retail experience to the wholesale environment," said [Steve Nelson of Highmark]. "Highmark's exchange will give small business employees a chance to truly choose a health plan option that's right for them."

With a defined contribution approach, an employer sets a monthly fixed dollar allowance for employees. They use this money to go to an online insurance store to select from a menu of seven Highmark health plan options as well as two dental and vision insurance plan options.

"Our platform seamlessly packages health and ancillary products to look and feel just like a traditional group plan, which is what most employers, employees and brokers are familiar with, but also gives a menu of options," said Jonathan Rickert, Array Health CEO. "We have extensive experience in exchanges, and we look forward to bringing our expertise to the Pennsylvania marketplace with Highmark."

In the coming weeks I hope to  have the opportunity to interview Array and Highmark about their new partnership. In the meantime, congratulations.