Aon Hewitt: Year-Two Enrollment Results Show Private Health Exchanges Can Mitigate Costs and Create Greater Individual Accountability

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Mar 06, 2014, 07:34 ET

LINCOLNSHIRE, Ill., March 6, 2014 /PRNewswire/ -- As employers search for new and innovative ways to provide competitive benefits to employees, positive second year enrollment results from Aon Hewitt, the global talent, retirement and health business of Aon plc (NYSE: AON), demonstrate that the Aon Active Health Exchange is delivering on its promise to engage consumers, offer broad choice and control cost.

During the enrollment season last fall, more than 600,000 employees and their family members enrolled in group health benefits for 2014 through the Aon Active Health Exchange. According to Aon Hewitt's post-enrollment analysis conducted by an independent third-party, nearly 75 percent of enrollees felt confident they chose the health plan that offered the best value for them and their family, and 87 percent liked being able to choose among multiple carriers. The Aon Active Health Exchange, the only private exchange for large employers that offers fully insured group health plans from multiple insurance companies, is part of the company's suite of innovative health solutions designed to help employers implement new and sustainable benefit strategies that meet the individual needs of employees, retirees and their families.

"The Aon Active Health Exchange facilitates health care consumerism and aims to drive healthier behaviors by transferring the responsibility for making health coverage and insurance company decisions from the employer to the employee, and we're seeing employees embrace this shift," said Cary Grace, CEO of Aon Health Exchanges. "By creating a marketplace where there is strong competition at a consumer level, employees better understand the support provided by their employer, and they are comparison shopping to find the solution that best meets their needs. This kind of consumer buying power gives individuals the freedom to reevaluate their health coverage options each year to ensure that their coverage continues to meet their personal needs. It also encourages insurance companies to deliver greater value and provides incentives for ongoing market innovation that benefits them, consumers and employers."

Early Signs of Cost Mitigation
Aon Hewitt launched its private exchange for active employees in the fall of 2012. More than 150,000 employees and their families from several large employers enrolled in health benefits for the 2013 calendar year. The average cost increase in fully insured premiums for these companies returning to the private exchange in 2014 was 5.1 percent, including the reinsurance fees levied on all group health plans under the Affordable Care Act. Comparatively, Aon Hewitt's estimates and other industry reports show that average health care cost increases for large U.S. employers are likely to be approximately 6 percent to 7 percent in 2014, before employers make changes in deductibles and copays. The Aon Active Health Exchange plan designs remained unchanged from 2013 to 2014.

"One of the primary goals of our private exchange is to bring down the rate of increase in overall health care cost to something that looks more like general inflation," says Ken Sperling, Aon Hewitt's National Exchange Strategy Leader. "Our private exchange allows companies to maintain this benefit without having to erode its value or increase what individuals have to pay for it, which has been the pattern for the last decade. The second-year premiums in our exchange show early but promising signs that this downward shift is indeed occurring as the exchange helps align the interest of employees, employers and insurance companies."

Consumers Picked a Broad Array of Plans
Aon Hewitt's enrollment data reaffirms that the type of health coverage employees chose for 2014 is not one-size-fits-all. Forty-two percent of employees chose a moderately-priced Silver plan, which was closest to what they had before enrolling in the private exchange. Thirty-one percent elected a Bronze-level plan, choosing leaner coverage in exchange for lower deductions from their paychecks. More than a quarter of employees chose to purchase richer Gold and Platinum coverage (17 percent and 10 percent, respectively).

When choosing a coverage level, most employees said they based their choice on price (32 percent) and the desire to choose a plan that offered coverage similar to their current plan (23 percent). Almost one in five said they chose coverage that they believe offers the best level of medical benefits for them.

When choosing among insurance carriers offered through the private exchange, 36 percent of employees said they chose the lowest cost carrier for their selected coverage level, 25 percent chose a carrier with which they had a good past experience, and 22 percent chose a carrier based on the match between their doctor and the insurance company's network.

"Choosing health benefits is a deeply personal and complex decision. Our private health exchange provides a full suite of decision support tools to provide employees with the information they need to purchase the right coverage and insurance company for them," says Grace. "Because it is easier to understand the costs and differences between plans in our exchange, we've seen employees buy up as well as buy down, and they appreciate having the freedom to make those choices."

According to Aon Hewitt, transparency into the total cost of group health benefits and employer subsidies is another positive outcome. Aon Hewitt's post-enrollment analysis showed that three-quarters of employees who enrolled in the Aon Active Health Exchange said they had a good understanding of how they share the cost of group medical coverage with their employer.

Second-Year Enrollment Results Indicate Price Matters and Choice Highly Valued
When analyzing the election patterns of those individuals who renewed their health benefits through the Aon Active Health Exchange in 2014, 19 percent switched plan levels, with 12 percent electing leaner plan designs and 7 percent electing richer coverage. Fifteen percent switched insurance companies. When asked the reason for switching carriers, 27 percent of employees said it was because the new insurer's premium was the best deal, and 26 percent said their prior carrier increased their premium too much. Only 2 percent said it was because their doctor left the insurer's network.

Distribution of Enrollment Across "Metallic*" Tiers for Re-Enrolling Employees	2013	2014
Bronze	27%	30%
Silver	34%	36%
Gold	25%	22%
Platinum	14%	12%

*The four "metallic" tiers provide employees with options regarding the "richness" of plan coverage, with Bronze being the leanest level of coverage and Platinum being the richest.

"Broad distribution across metallic levels means we succeeded in providing something for everyone," added Sperling. "And the fact that more than 80 percent of employees stayed in the same metallic level in 2014 tells us they got what they wanted in 2013 and didn't need to change, even though it was easy to do so."

Significant Use of Decision-Support Tools
Use of Aon Hewitt's online decision support tools, including health plan comparisons, cost estimators and provider search tools, continues to be significantly higher for employees who enrolled in their benefits through the Aon Active Health Exchange compared to the 9 million employees who completed a "traditional" enrollment with Aon Hewitt. Specifically:

86 percent of employees used a comparison tool showing high level design features across plans, compared to just 50 percent of employees who completed a "traditional" enrollment
66 percent used a tool to search for their network doctors and hospitals, compared with 18 percent usage in traditional plan enrollment

Sixty-four percent of employees used a new tool introduced on the private exchange for 2014 called "Need Help Deciding?" that walks employees through a step-by-step decision process to select the plan that works best for them based on their ability to handle an unexpected medical expense versus the desire to minimize their payroll deductions.

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About Aon Hewitt
Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit www.aonhewitt.com.

About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon's global partnership and shirt sponsorship with Manchester United.