Walgreen Co., the nation’s largest drugstore chain, said last week that it will move its coverage to a private insurance exchange run by the benefits consultant Aon Hewitt.
This approach, called defined contribution health insurance, involves giving employees a set amount of money and then letting them pick their own coverage through a private marketplace or exchange that helps them sort out the choices.
Citi analyst Carl McDonald sees the Walgreen announcement as a positive because of the type of business it could deliver to health insurers. He noted that big employers like Walgreen typically pay their own claims and hire insurers only to administer the policies. That type of coverage produces smaller revenue totals for insurers, as opposed to so-called fully insured plans where the managed care company pays the claims as well.
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