Drugstore giant Walgreen Co. partnered up with Blue Cross Blue Shield to promote the Affordable Care Act earlier this summer, but the chain has decided to skirt offering coverage under Obamacare, instead choosing to take part in a private health insurance exchange.
According to CBS News, the company decided to alter its employees’ healthcare plans to protect itself from the new regulations imposed by the Affordable Care Act. Instead of using insurance plans offered as part of Obamacare, the drug store chain has instead decided to send its more than 160,000 employees into a privately run healthcare exchange backed by Aon Hewitt.
“It protects them against rising health care costs in the future,” CBS News business analyst Jill Schlesinger told the news organization. “This is a way to reduce future costs but also relieves them of some of the compliance issues that health care really comes with on the corporate side.”
Typically, Walgreens employees can choose between two to four plans, with the company paying a substantial amount of coverage costs. However, in the private exchange, employees can pick from 25 plans, shifting the burden of health insurance costs away from the employer and onto the worker.
The shift is expected to impact approximately 68 percent of employees.
The drugstore giant won’t alter the amount it contributes toward healthcare plans, but allowing the employee to pick from an array of plans makes “employers healthcare costs more predictable,” CBS News reported. And much of the contribution depends on how extensive the plan picked by the employer is.
“I think the only way to drive down costs in the healthcare space is to have the consumer buying the healthcare be knowledgeable and educated and understand what they are buying,” Tom Sondergeld, senior director of health and wellbeing for Walgreens, told CBS News.
The decision for Walgreens to switch to a private exchange protects its employees from rising costs of premiums under Obamacare but doesn’t guard its workers completely. While many employed by the company had limited options when choosing plans, having such a diverse selection may cause them to pick inadequate coverage.
Still, picking insurance under Aon Hewitt’s exchanges appears to be easier than doing so under Obamacare. Employees using the private marketplace are required to answer between 10 and 15 questions to determine which plan suits them best compared to the pages of information needed to register in one of the Affordable Care Act’s exchanges.
Ken Sperling, Aon Hewitt’s national health exchange strategy leader, told CBS News enrolling for health insurance through their exchange is “a little bit more involved than buying a plane ticket, but I don’t think it’s more involved than buying a TV.”
Despite Walgreens’ commitment to promoting the Affordable Care Act, the drugstore isn’t the only company moving toward a private exchange. According to a survey released by the Kaiser Family Foundation earlier this year, manufacturing and retail companies like Sears Hold Corp. and Darden Restaurants — which runs Red Lobster and Olive Garden chains — are opting for private exchanges.
Walgreen operates more than 8,000 stores nationwide and employs 240,000, offering health insurance from 180,000 employees and their dependents. And, according to CBS News, the company expects to cover more than 600,000 with the private exchange options starting next year.
