Towers Watson & Co (NYSE:TW) wasn’t far behind in announcing several large health insurers signing up to participate in its OneExchange private health insurance exchange. Participating insurers include Aetna, Anthem, Kaiser Permanante, and UnitedHealthcare. Towers Watson & Co (NYSE:TW) also recently bought Extend Health, which runs the largest private Medicare exchange in the nation.
AON Hewitt, the human resources business unit of Aon PLC (NYSE:AON), successfully enrolled more than 100,000 employees across the U.S. in health insurance plans last fall through its Corporate Health Exchange product. The company’s survey of enrollees found that nearly 80% “felt confident they chose the health plan that offered the best value for them and their family.” 93% liked being able to choose from multiple insurance carriers.
More good news appears to be on the way for Aon PLC (NYSE:AON), Mercer International Inc. (NASDAQ:MERC), Towers Watson & Co (NYSE:TW), and other private health exchange companies. A study by Accenture concluded that participation in private exchanges will catch up with public exchanges established by Obamacare by 2017. After that point, enrollment in the Obamacare exchanges will grow slowly, while private exchange enrollment will increase rapidly. Accenture says that more than a quarter of employers in the U.S. are considering moving to a private exchange within the next three to five years.
Another study by Booz & Company found that around 80% of employers would rather allow employees to purchase insurance through a private exchange than through a public exchange. What were the reasons given for this strong preference? Better product choices, more flexible benefit designs, better customer service, and “a general wariness of government-run entities.”
Taking stock
I suspect that if the federal government was a publicly traded entity, its stock would be in a free-fall right now. On the other hand, the stocks of the three private exchange companies mentioned earlier are doing pretty well. Mercer International Inc. (NASDAQ:MERC) is up 13% over the last year. Towers Watson & Co (NYSE:TW) shares have climbed nearly 30% during the same period. Aon PLC (NYSE:AON)’s stock jumped nearly 35%.
HHS is talking about its “confidence” amid what looks to be a fiasco in the making, judging from the GAO report. Meanwhile, private companies are making real progress. The employers in that Booz study might be on to something with that wariness of government.
The article Obamacare Exchanges Flail While Private Exchanges Flourish originally appeared on Fool.com and is written by Keith Speights.
Fool contributor Keith Speights has no position in any stocks mentioned. The Motley Fool recommends Aon. The Motley Fool owns shares of Aon.
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