The powers that be at two large U.S. companies — Sears and Darden Restaurants (Olive Garden, Red Lobster, LongHorn Steakhouse, and others) — are looking to transition away from their traditional employer-sponsored health insurance and toward a model that gives employees a fixed amount of money with which to buy coverage.

But rather than just handing workers a pile of cash and telling them “good luck” at finding quality coverage in the high-price individual market, both Sears and Darden will be setting up online marketplaces for employees to shop from a variety of employer-backed group plans. The hope is that such marketplaces will actually bring insurance premiums down — or at least keep them from continuing to skyrocket — by having insurers compete for business.

Aon Hewitt, which is providing the marketplaces for both Sears and Darden, says that employees will have the choice of five different health plans, each of varying levels, from five different providers. What makes this different from current systems where employers offer workers multiple plan options is the “shopping” experience, wherein the employees are seeing the full cost of each plan and using their own pile of allotted cash to decide which one is the right one for them.

According to the Wall Street Journal, while neither company is saying how much it will allot to employees, Darden, which will announce the plan to workers in November, claims that workers will continue to make the same out-of-pocket contribution they do now while receiving approximately (a key word) the same amount of coverage.

Regarding concerns that the ever-increasing insurance premiums may outpace the amount of cash the employers are willing to contribute, Darden also says that the money allotted for each of its approximately 45,000 full-time employees will increase as insurance costs increase.

The insurance industry hasn’t yet reached a consensus as to whether this approach will be a success. Over at Worst Company In America mainstay WellPoint, an Exec. VP tells the Journal that “Within the next two or three years, it’s going to be mainstream.” Meanwhile, a senior executive at fellow WCIA regular UnitedHealth Group says that people are watching how well Sears and the others do with the approach. “The jury’s out,” she tells the Journal.

UPDATE: A Consumerist reader who is also an Aon Hewitt employee says that the company launched the marketplace for its own employees last year:

I can tell you that having identical offerings from multiple insurance companies (identical being key) – the prices were low as compared to equivalent plans in a non-market model. Essentially you have insurance companies all offering the exact same product but being forced to compete on price to get subscribers.

I know it’s an approach that is garnering some skepticism… but for this consumerist reader it resulted in lower prices for better coverage.

Big Firms Overhaul Health Coverage [WSJ.com]

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