Many major corporations are shifting the responsibility of choosing healthcare coverage onto employees. On September 18th, 2013, Walgreens announced it will send workers to private exchanges to purchase their own healthcare coverage. This exchange allows employees to choose from as many as 25 different plans, instead of the three or four plans normally available to these workers. For example, employees in California can choose from a variety of California health insurance plans, including standards like Anthem Blue Cross Blue Shield. Walgreens says its contribution towards coverage costs will not change, and that it hopes this move will give employees more options.
In years past, employers would offer workers the choice between only two or three plans. This practice became burdensome for the employer, who struggled to find one or two plans that served the wide variety of healthcare needs of its employees. This traditional approach became a poor choice for employees, because these packages tended to lack the options many workers needed.
Defined contribution health insurance is the alternative to the traditional approach. In this practice, employers give the worker a predetermined amount of money to spend on insurance. This shifts the responsibility of sorting out the choices onto the consumer himself – the employee.
There are 8,100 Walgreen drugstores, nationwide, and this company provides health coverage for about 180,000 employees and dependents. Other major companies, including Sears Holdings Corporation, and Darden Restaurants Inc., which operates the Red Lobster and Olive Garden chains, have transitioned to this approach. The switch to defined contribution health insurance makes healthcare costs more predictable for these employers.
Private exchanges that are similar to public exchanges and marketplaces are emerging as the result of the Affordable Care Act.