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Life Health > Health Insurance > Health Insurance

Aon makes big bet on exchanges

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Executives at Aon (NYSE:AON) made it clear today that they think private U.S. health insurance exchanges will be important.

Gregory Case, the president of Aon, talked about Aon’s corporate exchange programs several times during a conference call the company held to discuss its third-quarter earnings with securities analysts.

Aon, a company that provides “human resources solutions and outsourcing services,” among other services, is reporting a total of $210 million in net income for the latest quarter on $2.7 billion in revenue, up from $208 million in net income on $2.7 billion in revenue for the third quarter of 2011.

The human resources unit is reporting $80 million in operating income for the quarter on $971 million in revenue, up from $61 million in operating income on $957 million in revenue for the comparable quarter in 2011.

Some of  the growth in HR operating income came from restructuring the Aon Hewitt consulting unit, the company said in a discussion of its results.

During the call, Aon executives said the company has invested heavily in developing a health insurance exchange, or Web-based health insurance supermarket, program. The company is expecting its exchange program to serve employers with 100,000 enrollees in 2013.

The Patient Protection and Affordable Care Act of 2010 (PPACA) calls for   federal and state agencies to set up government-managed exchanges for individuals and small groups in every state starting in 2014.

Benefits specialists at Aon and elsewhere have said that they believe that many large employers, and even some individuals and small groups that could be eligible for the PPACA exchanges, could be interested in privately run exchanges.

Mitt Romney says on his website that he supports repealing PPACA and also supports the exchange concept. 

Aon has had an exchange program for corporate retirees for several years, and that program has been doing well and attracting new clients, Case said during the call.

The election “doesn’t really have a direct impact on the investments we’re making here,” Case said. 

An exchange concept can give a company a vehicle to shift to a “defined contribution” approach to health benefits, or providing a set amount of cash for health benefits, while continuing to offer health benefits, he said.

About 43 percent of corporate human resources heads and chief financial officers already show an interest in trying an exchange, even though a big, national exchange program is not yet in place, Case said.

Demand for an exchange “is really independent of political parties,” Case said.   

See also:

Private exchange firm: PPACA should help us

Aon Hewitt health exchange attracts big employers

The Catch: Big Boy Exchanges


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