Last week I had an opportunity to travel to Washington, D.C. and visit with Congressional staff. The purpose of our time was to introduce the Private Exchange Coalition (PEC), a new group formed by five organizations (Array Health, Bloom Health, ConnectedHealth, Connecture and Softheon) organized and guided by Leavitt Partners. The PEC promotes industry standards and best practices, and will focus on educating various stakeholders: employers, brokers, carriers and policy makers.

The majority of our visits were with Republican staff (we’ll visit with their Democratic colleagues after the summer recess) and as we are now post King v. Burwell, we enjoyed taking the pulse of lawmakers and learning where they stood relative to the Affordable Care Act. Perhaps the best part of our conversations was listening to my friend and colleague Ryan Howells from Connecture. Like ConnectedHealth, Connecture offers private exchanges to brokers, employers and carriers. In addition, Connecture has a significant block of government business, including powering

Ryan spoke to the financial “sustainability” of the public exchanges. Specifically he reminded us that over $4.8 billion was spent in total on both the FFM and the SBMs (to varying effect) and that the grants are now finished. There are many state exchanges that have an annual operating shortfall of anywhere between $25 million to $360 million and we all know that most states and the Federal government are not flush with cash.

Consequently it is time to look at private exchanges – and specifically, Web-based Entities (WBEs) like ConnectedHealth, Connecture and Softheon – as a distribution mechanism for subsidies or tax credits. Right now, as subsidy-eligible consumers go through a private exchange we have to transfer them to the FFM to secure their eligibility for different credits and subsidies. This is cumbersome and a less than ideal experience for the consumer.

Let’s stop handcuffing the system. WBEs have the technology to make the entire process a seamless and secure experience for consumers. And so the conversation about private exchanges should be about using them as distribution mechanisms for subsidies and not about whether private or public exchanges are going away.

Private exchanges will continue to build as the preferred mechanism of providing benefits to the total workforce, some of who do qualify for tax credits for their health insurance. Let’s leverage the expertise and solid technology of the private sector and start tackling the ongoing issues of cost and affordability.