Walgreen Co. is joining a growing push from big businesses to shift more responsibility for finding insurance onto their employees as health care costs continue to climb.
The nation's largest drugstore chain said Wednesday that it will send workers to a private health insurance exchange where they will pick from as many as 25 plans instead of having the company give them two to four options.
Employers normally pay most of the coverage cost, and Walgreen's contribution toward the benefit won't change. It said the move will give its workers more choices and help them become better consumers.
"I think the only way to drive down costs in the health care space is to have the consumer buying the health care be knowledgeable and educated and understand what they are buying," said Tom Sondergeld, senior director of health and well-being for Deerfield, Ill.-based Walgreen.
Employers have struggled for years with health care costs that climb faster than inflation and consume growing portions of their budgets. More are starting to veer away from the decades-old practice of offering workers only a plan or two with benefits the employee might not want.
The alternative, called defined contribution health insurance, involves giving employees a set amount of money and then letting them pick their own coverage through a private marketplace or exchange that helps them sort out the choices.
The switch can make employers' health care costs more predictable or give them a way to reduce the amount they spend per employee. Proponents of the approach say it also forces employees to pay more attention to the cost of their coverage, and that will make insurers compete more on price.
But it also means workers who are used to having their coverage chosen for them could wind up with big medical bills and inadequate coverage if they don't pick wisely.
Walgreen provides health coverage for about 180,000 employees and dependents.