SEPTEMBER 23, 2014

Walgreen Co.’s director of health, benefits and wellbeing knew his company, like most in the U.S., was on an unsustainable path of increasing health care costs combined with employees who didn’t focus on their wellbeing. But when the company’s senior directors started thinking about moving employee health care offerings to a private exchange, he was adamantly against it.

Eventually going along with it rather than being the only outlier, Thomas Sondergeld Sr. said it’s a decision he has not regretted in the least. In fact, speaking Monday at an employer health care conference in National Harbor, Md., Sondergeld said one concern people raise when talking with him about moving their company to a private exchange is giving up too much control. However, that is a part of the move he has relished.  “For many years, I spent too much time in the minutia of running benefits and I couldn’t do any strategy,” he said. “Now all I do is strategy.”

Sondergeld said he previously spent a lot of money “trying to keep disease down so we don’t have to pay for very sick people that come into our workforce. … It’s the conundrum that faces every employer … and it doesn’t work.”

The company’s executives faced three paths to take, he says:

1) continue as is;

2) bring more wellness to their employees (which wouldn’t work, he said, because of continued rising health care costs);

3) or introduce a private exchange, “which became a big discussion because of its ability to help control costs.”

They decided to move to Aon Hewitt’s private exchange offering.


Now, with year two open enrollment starting Monday, Sondergeld said he had to make no decisions about health care this year. “I didn’t have to make one decision about [open enrollment,] it was made for me, thank God,” he said.

Employees were also receptive to the change, he explained. But that involved changing their behavior. According to MetLife, employees spend on average five to 20 minutes looking at benefits. But the Walgreens private exchange system makes them look at benefits for 45 minutes, as they go through a multi-step process to pick the plan right for them. “If you give them the right tools, just like on, they will do it,” Sondergeld said.

An internal Walgreens survey found that 83% of the employees who enrolled liked the ability to choose and 75% understood how much their employer contributes to their health care.

For year two, Sondergeld said some carriers raised their rates “off the chart.” But that is what happens in competition, he added. While not directly naming the carrier, he said a Blue’s platinum plan increased substantially, but an employee who wants to stay in that plan level can easily change carriers in this open enrollment period.

“In the end, we believe we made a wise choice” in moving to an exchange, Sondergeld said.