Towers Watson to spend $215M on exchange operator

NEW YORK (AP) -- Towers Watson will spend $215 million to buy Liazon Corp., a relatively new company that operates private health insurance exchanges for employer-sponsored benefit plans.

The New York human resources and risk management consultant said the deal will hurt its adjusted earnings in fiscal 2014 by about 10 cents to 15 cents per share, but it will help build its presence in private exchanges. Buffalo, N.Y.-based Liazon was founded in 2007 and operates the Bright Choices Exchange.

The nation's largest drugstore chain, Walgreen Co., and other businesses have moved their employee-sponsored health coverage in recent years to private insurance exchanges.

This approach, called defined contribution health insurance, involves giving employees a set amount of money and then letting them pick their own coverage through a private marketplace or exchange that helps them sort out the choices. That compares to giving employees an option or two that the company has selected.

The defined benefit approach can give workers more coverage options and make health care expenses more predictable for employers, many of whom have struggled with spiraling costs for years. It also can put more of the responsibility for dealing with future cost hikes on the employee, especially if the company's contribution toward the benefit doesn't keep up with rising costs.

Shares of Towers Watson closed at $111.57 on Thursday. Its shares have almost doubled so far this year.