IBM To Move 110,000 Retirees to Private Health Exchange

But times do change and move continually.

Edmund Spencer (1552-1599)

In a move showing the fevered pace of health reform, IBM will move 110,000 retirees to defined contribution private Medicare health exchanges after December 31, 2013.   IBM will no longer pay for or directly manage retiree benefits.  Instead IBM will give a defined amount of money to Towers Watson Exchange Solutions, a private firm, to manage retiree health benefits. Low adminstrative costs and ability to compete with public health exchanges are driving factors along with the lure of collecting Big Data.

Private exchanges are not be confused with federal health exchanges, set to kick in on the same date, but will be run in parallel.   Towers Watson has already signed up750 large companies, including Dupont and Caterpillar for its private exchange.

The IBM move is significant because it shows large companies  no longer want to take the time and energy required to manage retiree health costs,   because the costs are becoming unsustainable in spite of and perhaps because of Obamacare,  because it shows big companies can no longer be counted on to supply open-ended retiree benefits, and  because it indicates the idea of defined contributions for the Medicare population, pushed by Paul Ryan (R-Wisconsin), VP candidate in 2012, are catching on.   The idea alarms the spokesman for the IBM Global Union Alliance, who sees it “as just another takeaway of retiree and employee benefits.”

Tweet:   After Dec. 31, 2013, IBM will switch 110,000 retirees to a defined contribution private health exchange, concurrent with the date Obamacare health exchanges begin taking effect.

PS. As we go to press, Time Warner has announced it has joined IBM in health shift for retirees.