Executives at Marsh & McLennan Companies (NYSE:MMC) told Wall Street securities analysts today that the company’s private health insurance exchange program is nice, but not currently a big moneymaker.
Daniel Glaser, Marsh’s president, talked about the Mercer unit’s Mercer Marketplace exchange program during a conference call the company held to brief the analysts on the company’s third-quarter earnings.
The Mercer exchange program now serves about 700,000 active employees and retirees, and it provides exchange access for a total of about 1.5 million lives, Glaser said.
The number of covered lives is about 43 percent higher than it was a year ago, he said.
“We are pleased with the continuing growth of Mercer Marketplace, although we would highlight that we do not expect it to contribute to earnings in 2016,” he said.
Later during the call, Glaser said that, for Marsh & McLennan, the primary exchange program goal “is to creating a platform and a framework for us to handle a lot of lives and to grow on a rapid but pretty consistent basis for many years to come.”
But the exchange is “really a startup organization in some ways,” Glaser said.
About half of the Mercer benefits clients who use the exchange program are new to Mercer, Glaser noted.
He said that the company’s overall benefits consulting profit margins are satisfying but that he believes looking at the exchange program’s profit margins would be premature.
“The exchange is a growth opportunity rather than an earnings opportunity at this stage,” Glaser said.
In other PPACA-related earnings call news:
• Jonas Prising, chief executive officer (CEO) of ManpowerGroup Inc. (NYSE:MAN), a staffing company, said that, at this point, the PPACA employer “shared responsibility” and coverage reporting provisions have led to fewer temporary staffing opportunities than Manpower had hoped. Few of the kinds of big companies Manpower tends to serve seem to be coping with the requirements by increasing use of temps, he said. PPACA has led to tax increases, but, up until now, he said, the company has been able to pass those increases on to clients.
• Martin Mucci, president of Paychex Inc. (NYSE:PAYX), another staffing company, said he has seen PPACA increase prospects’ interest in professional employer organization (PEO) arrangements. Mucci also said sales of the company’s PPACA employer reporting compliance assistance service have been strong, and that he thinks users of some competitors’ lower-priced assistance services may be surprised once they understand what level of service they actually bought. Efrain Rivera, the company’s chief financial officer, said he has not yet seen a big increase in 2016 health insurance-related arrangements, possibly because many small and midsize employers are just starting to see what 2016 renewal rates will be.