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More than 100,000 employees from Sears and Darden Restaurants will use Aon Hewitt’s healthcare exchange to select their health benefits.

Employers using a private exchange use a defined contribution strategy that gives each worker a set amount of credit to choose from among a menu of insurance options.

Liazon’s Bright Choice Exchange is growing at a rate of 100% a year and recently signed deals with Gallagher Benefits Services and Hub International.

Pro Choice

Aon Hewitt’s insurance “exchange” focuses an old idea in a new way. Will it become the next wave in benefits?

By  Mike Patten

[Page 3 of 3]

Chris Brathwaite, spokesman for Sears Holdings, says the Aon Hewitt exchange represents a new way for Sears, which had been self-insured.

“We are taking a new approach to medical coverage, an approach that we think will better meet the needs of our diverse workforce, while also providing our company with increased efficiencies in our healthcare offerings due to the competitive marketplace created by the new model,” he says. “The corporate exchange creates a competitive market in healthcare benefits at the individual consumer level, and we’re optimistic that competitive forces will drive efficiency and have a positive impact on quality and costs.

“This is not about shifting costs. It’s about increasing associate choice and options for their healthcare, and leveraging a competitive market to continue to positively impact overall costs.”

Time for Homework

Mellard says brokers who want to succeed in the new world of exchanges need to be learning all they can right now.

“I would be less studying those that are up and running and more studying your client customer book,” she says. “I think we know the profile of a customer that would fit into a private exchange. It is an employer that is at his or her limit on struggling year after year with trying to hold the line on escalating healthcare costs. I think the customer profile is one who is willing to make a serious commitment to a focus on health and productivity—the whole wellness piece. I think it’s an employer that is willing to give up some control over their healthcare.

“Clearly the top three industries I see across the board that seem to be most interested in going to a private exchange right now are manufacturing, retail and healthcare. You look at your customer base and which ones fit with that profile. Then it’s sitting down and talking to them very seriously about their level of interest and then finding the right insurance carrier partners. I think those conversations are happening all around the United States with all of those brokers who will be surviving and thriving in 2014 and after.”

Klonk concurs.

“The brokers who become educated about the process and about the best programs out there will win because they are offering the best options and solutions to their employers,” Klonk says. “It’s understanding where this works, where it doesn’t work, the type of workforce that this is going to be appropriate for and educating your employers about where this is going to fit right. Then the broker will win. If the broker sells this as a catchall, it’s a mistake.”


Many employers for years have used the exchange-based defined contribution model for health benefits for their pre-Medicare eligible retirees. What’s different this time is a heightened awareness of and focus on wellness and the effect lifestyle has on health and healthcare costs.

“It’s ‘Back to the Future’ in some ways, but I think we’re doing it differently because I think we have been doing a good job about educating the consumer, who is now more engaged in the purchase of healthcare and more engaged in their own personal health and well-being,” says Mellard. “I think it’s the ‘Perfect Storm’ right now."

Patten is a contributing writer.

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