Walgreen prescribes going private exchange routeNews added by Benefits Pro on March 19, 2014

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Joined: September 07, 2011

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By Allen Greenberg

LAS VEGAS – To go with a private exchange or not to go.

That’s the question a lot of employers are asking themselves these days and if they all listened to Tom Sondergeld, they’d leap right in.

Sondergeld, the senior director of health and wellbeing at Walgreen Co., has been described by some an exchange evangelist.

Speaking at the Health and Benefits Leadership Conference and Expo on Tuesday, he exhibited some of that fervor in describing why the nation’s largest pharmacy chain opted to take the plunge last September.

“I know exactly what I’ll pay every month, plus or minus team member count,” Sondergeld said in ticking off the virtues of life in a private exchange.

According to some forecasts, up to 28 percent of employers might shift to a private exchange by 2017. Still, less than 1 percent of employers today have so far done so.

As a result of its shift, about 160,000 Walgreen employees now get to choose which coverage plan suits them best.

Before its move, Walgreen had two insurers each offering two plans, for four total options. The Aon exchange it turned to has five insurers each offering five different plans.

At the time it made the move, Aon’s exchange included 18 companies and 600,000 people.

Sondergeld, in other words, still represents a distinct minority among employers.

As other employers weigh the pros and cons, Sondergeld offered a few bits of advice.

• If you start customizing plan design, he said, things can become expensive.

• Better to keep in mind the notion that these exchanges were built with a “one-to-many” relationship in mind.

• It’s crucial to give employees the right tools to compare costs easily and to file claims.

• Despite perceptions to the contrary, employers don’t need to have a healthcare defined contribution plan in place to go the private exchange route.

• The amount of employer subsidies needs to be set carefully, or employees will opt for less coverage, leaving themselves potentially under-insured.

While no doubt a fan of private exchanges, Sondergeld is also fully aware of their potential drawbacks.

The market is “not mature enough and so there’s no surety of what I’m going to get next year. I worry about the pricing,” he said

That, of course, is a familiar complaint to many employers.

On the other hand, he said, “I really do think our foray is cutting edge. We believe health care needs to change. That’s why we went there.”

Originally published on BenefitsPro.com
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