Walgreen moves health coverage to private exchange

By Tom Murphy

Associated Press

Published: Wednesday, Sept. 18 2013 12:00 a.m. MDT

Workers who use these exchanges also can wind up paying a bigger share of the insurance bill over time if the contribution from their company doesn't climb to keep up with insurance costs or the worker doesn't chose a cheaper plan.

Sondergeld, the Walgreen executive, said his company will consider adjusting its contribution in the future if needed.

Employer-sponsored coverage is the most common form of health insurance in the United States, covering more than 149 million non-elderly people. Benefits experts say defined contribution plans make up a relatively small slice of that total, but the trend is expected to grow, especially with big companies.

A total of 29 percent of firms with 5,000 or more employees surveyed earlier this year by the nonprofit Kaiser Family Foundation said they are considering offering benefits through a private exchange. In contrast, only 7 percent of companies with 200 to 999 workers are considering it.

The consulting firm Accenture projects that private health insurance exchanges will become bigger than the overhaul's public version by 2018. It expects about 40 million people to be enrolled in coverage through a private exchange that year, compared to 31 million enrolled through the public version.

That's a big leap from next year, when Accenture expects private exchange enrollment, counting workers and retirees not yet eligible for Medicare, to total 1 million.

Health benefits trends tend to grow slowly. Many companies prefer to wait to see how other companies fare after making a big switch before they try it on their own employees.

But benefits experts say more companies are starting to appreciate the stability defined contribution plans offer. The approach means a company that pays its employee medical bills isn't on the hook for an unexpected expense if a wave of big claims hits during the year.

"It's something they can budget for as opposed to something they are surprised with," Aon Hewitt's Sperling said.

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