Big Chains in Town Move to Private Insurance Exchanges

With Obamacare looming, companies like Walgreens and Olive Garden are following the example of IBM and Time Warner.

Credit: Taylors Patch
Credit: Taylors Patch
Last week Walgreens joined other major retail and restaurant companies including Sears Holdings Corp. (K-Mart) and Darden Restaurants (owners of Olive Garden and Red Lobster, among others) in shifting its 160,000 employees to private insurance exchanges.

They're headed down the path that companies like IBM and Time Warner have already gone with their retirees. The question workers increasingly need to ask themselves is: When it comes to your health care plan, would you rather have two options or two dozen?

Here's how the new "two dozen" plan works: Rather than providing employees with a couple of healthcare plan options, a company will provide a fixed amount of money to choose coverage from an array of plans operated by a private health insurance exchange.

That can sound daunting. The health exchanges say it isn't that bad. "It's a little bit more involved than buying a plane ticket, but I don't think it's more involved than buying a TV," said Ken Sperling of Aon Hewitt, the national health exchange that Walgreens is working with.

The wider hope for these enormous health exchanges is similar to those public health care exchanges assembled under Obamacare: that increased competition will reduce the health care prices.

As Forbes’ Paul Howard puts it,“Let’s give credit where credit is due. Obamacare has undoubtedly accelerated interest in private exchanges by spurring investment and discussion of the public insurance exchanges mandated under the law."

“Credit” is a double-edged sword, of course. Should a worker, accustomed to having coverage managed by their employer, make an unsound choice, will they end up with an enormous bill? (Yes.) Will employers contribute as much as they have in the past? (Maybe.) Will employer contributions be enough to cover health care costs? (Maybe.)

What are you thoughts about what's next for your family's heath insurance? Let us know in the comments or in a blog post.


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