Wal-Mart Exploring Private Exchange for Small Businesses

According to the Orlando Business Journal, Wal-Mart is exploring the idea of building a private health insurance exchange tailored to offer cheaper health insurance to small businesses. Marcus Osborne, a VP for the company stated that Wal-Mart wants to work with insurers and managed care companies to find new, low-cost health insurance options tailored for small companies, which historically have limited options. Smaller employers make up a huge portion of the health insurance market in the aggregate, and it’s an underserved market.

Wal-Mart already worked with Humana to offer low-cost Medicare Part D drug coverage plans, in part because traditional health insurers zeroed in on the average Medicare patients; Wal-Mart went, again, for the underserved market that needs a less-expensive option. “The biggest problem today small employers face from a health insurance perspective is they have no alternatives,” Osborne said. “If they find anything, they’ve got to take it. There’s something wrong with that.”  A private health insurance exchange such as this may be a viable alternative to the government-run SHOP exchanges mandated in the ACA.  Until now, private exchanges such as Aon Hewitt's have been aimed at large insurers.  

Wal-Mart made headlines last fall when it announced that its employee health insurance plan would switch to using a very narrow network of providers for certain expensive procedures, and cover all expenses for the employee and a family member, including travel to these selected facilities.  Wal-Mart may be looking to build upon this experience in using these types aggressive value-based purchasing strategies in a small-business private exchange, which have the potential to keep costs low.