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Many employees opt for lower-cost health care coverage through exchanges

Private Health Insurance Exchange

More than 40% of employees opted for a less expensive plan than what they previously had when their employers offered them coverage through a private health insurance exchange, according to an Aon Hewitt analysis released Monday.

The analysis involves a private exchange Aon Hewitt launched last year, with the first policies effective Jan. 1.

The exchange offers coverage to nearly 100,000 employees, including the U.S. employees of Aon Hewitt parent Aon P.L.C., Hoffman Estates, Ill.-based retailer Sears Holdings Corp. and Orlando, Fla.-based chain Darden Restaurants Inc.

The coverage is provided by nine insurers, including HealthNet, Kaiser Permanente, UnitedHealth Inc. and Health Care Service Corp., which operates Blue Cross/Blue Shield plans.

The exchange model deploys a defined contribution approach in which employers provide a fixed premium contribution, with employees paying more or less depending on the level of coverage they choose.

According to then analysis, 42% of employees selected a less generous plan compared with what they previously had, 32% selected a plan similar to what they had previously and 26% opted for a richer plan.

Offering a wide choice of plan designs and insurers is what employees want, said Ken Sperling, Aon Hewitt's national health exchange strategy leader in Norwalk, Conn.

“The election patterns we observed prove that a well-designed exchange does not just drive employees to less comprehensive coverage. Employees who want richer coverage are free to purchase it — and they do. Health care is personal, and people have different needs. This model lets employees decide which plan and which insurance company is best for them, and they are free to modify that choice on an annual basis,” Mr. Sperling said in a statement.

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The exchange “allowed us to move away from a one-size-fits-all approach to providing health benefits,” said Danielle Kirgan, senior vice president of total rewards and shared services at Darden Restaurants.

“This year, we were able to offer a broader array of health care choices than we have in the past, giving our employees the flexibility to choose the level of coverage that best meets their needs at a price they could afford,” she said in a statement.

The analysis found a big move toward lower-cost consumer-driven health plans and away from more traditional and expensive preferred provider organization plans.

For example, in 2013, 39% of employees enrolled in CDHPs, up from 12% in 2012. Conversely 47% of employees enrolled in a PPO this year, down from 70% in 2012. Enrollment in health maintenance organizations slipped to 14% this year, down from 18% in 2012, according to the analysis.

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