Are Private Exchanges Good or Bad for Health Insurer Profits?

An article that appeared in today’s AISHealth is saying that health insurers could see their profit margins more than double if their large employer clients transition from a self-insured model to full risk via private insurance exchanges.

The article, which was reprinted from INSIDE HEALTH INSURANCE EXCHANGES, says that the Sept. 17, announcement that Walgreen Co. would move its 160,000 self-insured employees to Aon Hewitt’s multicarrier insurance exchange has gotten the buzz started. Continue reading

CDHPs Continue to Grow: Aon Study

New research from Aon Hewitt shows Consumer-Driven Health Plans (CDHPs) have become the second most prevalent plan offered by employers after preferred provider organizations (PPOs), and could potentially surpass PPOs as the most common plan type offered in the next three to five years.

According to Aon Hewitt’s 2013 Health Care Survey of nearly 800 large and mid-size U.S. employers covering more than 7 million employees, 56 percent of employers currently offer CDHPs as a plan choice, and another 30 percent are considering offering one in the next three to five years.

While 10 percent of employers offer CDHPs as the only plan option, another 44 percent are considering doing so in the next three to five years. In 2012, employers reported at least a 2 percentage point lower cost trend for CDHP plans (4 percent) versus other plans, including PPOs (6 percent), HMOs (7 percent) and Exclusive Provider Networks (6 percent).

See the full story at PRNewswire.com

Analyst Sees Private Exchanges Helping Group Insurance Sales

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.

See the full story at LIfeHealthPro.com

 

Walgreen to Give Workers Payments to Purchase Health Plans

Walgreen Co.and another 17 large employers are turning to a new concept of giving them money to buy health benefits via private online marketplaces known as exchanges.

Aon Hewitt,  the large employee benefits consultancy, said Walgreens will be the largest employer thus far to join its Aon Hewitt Corporate Health Exchange, bringing more than 160,000 eligible employees to such coverage in 2014. Aon Hewitt said it could not yet disclose the others coming into the exchange in 2014.

See the full story at Forbes.com