Aon Hewitt isn't letting health care reform dictate its business model. If anything, it's the other way around. In addition to publishing an influential report on the implications of health reform for large employers, CEO Kristi Savacool has been to the White House several times in recent months to discuss the company's retiree health care exchange and upcoming active employee exchange model. "We have been on the front line," says Savacool, "really influencing the development of health care reform, influencing our clients with respect to how they put their own health care strategies together."

Here, the former Hewitt Associates exec shares how joining forces with Aon has enhanced that capability and provides her take on the evolving health care landscape, why wellness programs are more important than ever and the future of the profession.


How has the company grown since the acquisition?

Savacool: Over the last year or so since we've come together - we closed in October of 2010 - we've discovered more and more opportunities to serve clients with the combined assets of the company. Health care reform really is a big piece of that. We are going big into health. We are completely committed to it being one of our top strategies because it is of that level of importance to our clients, large and small alike, public and private sector alike. It is something that sits at the top of their agenda, so it's at the top of our agenda.

We really feel like we're in a great position, and the best position among our competitors and others, to serve our clients with a combination of capability related to their health challenges - which drive back into their talent, their productivity, wellness, the kinds of outcomes that drive an improved situation with respect to the cost curve.


Have you had to make adjustments around health care reform?

Savacool: I would say we've adjusted with respect to ensuring that we have solutions that enable health care reform and help employers respond to it, as well as shape a health care strategy that serves their business interests with or without health care reform.

If you really step back and look at it, the big issues related to health care cost management, overall health and productivity, and the kinds of outcomes that employers are driving, and health care reform as an influence on what they do, employers nationwide face the kinds of questions that are first and foremost in the minds of CFOs and CEOs.

We have a database of employers nationwide that shows that the cost of health care per person is crossing over $10,000 a year. So when you think about the kinds of solutions that are needed to both change that cost curve, as well as most fundamentally improve the wellness and health and productivity of their employees, that becomes incredibly important.

So the solutions that we offer from the standpoint of health care design, administration options moving from more of a group-based set of solutions to an individual-based set of products in the form of the health care exchanges. Those are adjustments in the form of solution offerings, but it really isn't just in response to health care reform. It's really important to know that we're actually influencing those directions as they come forward.

It's really exceeding our expectations in terms of the opportunities to serve clients better and develop solutions that are holistic in terms of their benefits needs.


Can you give a little bit of background on your health care exchange and how it's going?

Savacool: Let me draw a parallel for you to the retirement pension market. If you compare 1980 to 2005 and you look at retirement plan participants - I'm going to contrast this to health in a minute - 61% of participants were in active retirement and DB plans and 39% were in other DC plans, such as thrift saving plans and profit-sharing plans. And none were in 401(k) plans. Today, 62% are in 401(k) plans, 11% in other DC and only 28% in DB plans. So, we're essentially moving from a group-based or a company-sponsored plan to a more individual level of responsibility.

When you look at that trend and you look at health care, there's a parallel track happening. This is really parallel to the DB-to-DC transition.

I draw the parallel to health care. If you look at 1988, 73% of enrollments were in conventional plans, about 16% in HMOs and only 11% in PPOs. Today (2011), only 1% are in conventional plans, 17% in HMO, 55% in PPOs and 17% in quasi-defined-contribution kinds of plans.

So, when you think about where exchanges fit in this, and you look at the transition to an individual level of responsibility and moving from a self-insured to an insured marketplace, you get a trend toward the utilization of exchanges, both for retirees and for active employees.

We entered the business in the retiree exchange business and have had great success. In fact, the demand this year, the rate of growth and the utilization of exchanges to both advise and then place the health insurance is growing pretty significantly. When we look at our large corporate employers - we have about 562 that we surveyed recently - what we found is that 94% of those employers are committed to offering and financially supporting health benefit coverage for their workforce in some form.

To the question I often get asked, "Are employers bailing out?" - the answer is no. They're going to change the solution set that provides for health care coverage, but they are unlikely to exit. We are executing right now on our strategy related to our retiree health care exchange, and we're in the process of building a corporate exchange for those who can't access the state exchanges because they're too big, they have more than 1,000 employees.

The interest from employers is high. We think it's in their best interest, and we're working with the insurance markets to define that.


Are you thinking about competing with state exchanges in the future?

Savacool: It doesn't compete with the state exchanges. It really is complementary. In fact, we spent time at the White House meeting with members of President Obama's staff on health care reform and the exchanges for state governments and U.S. companies; I think I've been there three times in the last six months to talk with them about that. Because they really are complementary, and as the exchange network, if you will, develops, everyone from very large, jumbo-level employers to small businesses will be able to avail themselves of the opportunity to participate in that.

How that ultimately lands between those who choose to participate in the state exchanges on behalf of their employees, they do a contribution of sorts, and those who participate in some industry combination - that's all developing. But the concept, the important message, is that the concept of combining the capability of accessing the insurance markets in a very efficient way, in providing advice to those in terms of the best health care options for them and placing that insurance is very much here to stay.


How are you envisioning the structure?

Savacool: You would have a set of options that might be in a metallic kind of structure - bronze, platinum, gold, etc. - that have different attributes. Think of grouping your health care plans into different selections that are grouped based on carrier, design and price point. So you, as a prospective health care insurance consumer, can make choices: Carrier A through D, you can choose a design that works for you that has different coverage options, different deductible options, and then there's a price point associated with each of those. So you would contact the exchange, talk through your health care needs. You would get advice in the form of what the different options were, and then you would make a choice around that. Your employer would contribute a subsidy to a certain level and then you would pay the difference to the extent that there was one.

So there are a lot of moving pieces, and given the amount of advice that needs to happen with respect to exchanges, we think that we're really well-positioned based on our expertise.


What keeps you up at night?

Savacool: Oh gosh. You know what? In the end - and it is one of the reasons I choose to come work for Hewitt seven years ago (now Aon Hewitt) - and that's that what we do matters a lot. It's important, it's consequential and there's never been a time when retirement and health and the wellbeing of people has been so important; the financial wellbeing, the physical and mental well-being, and we impact that greatly.

So if something keeps me up at night it's how can we craft the solutions that best deliver those kinds of results and engaging our team in doing their best work - taking the combination of Aon Hewitt and being able to really drive the best of the assets that we have in the form of solutions for our clients.

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