Times were tough in Baton Rouge.

And so Steven made a tough decision: He would leave high school in his senior year in an attempt to get more hours as a forklift operator in a local shipping center.

“I had to work to help pay the bills for my family — my parents and my siblings,” he said. “I just couldn’t work as many hours as I needed and go to school at the same time.”

Steven always wanted to go back and finish his education. But after a few years, he began to believe he’d lost an opportunity to do that. “I’ve thought about it, but I didn’t think there was really a way,” he said. “I thought I’d probably have to settle for a GED.”

But unbeknownst to Steven, school leaders at West Baton Rouge Parish Schools were making plans to help students just like him. The district launched its dropout recovery partnership with the NoDropouts program in 2011.

Soon, Steven got a call.

“I wasn’t going to answer it at first because I didn’t recognize the number,” he said. “But something told me to answer. And a lady told me about this free program and I got really excited.”

Hours later, he was working on his first assignment. And today, he’s a high school graduate.

He’s not going to stop there.

“My goal is to get a business degree at a community college,” he said. “I’d like to open my own business.”

And while times are still tough, Steven said he’s confident now that he can meet that goal.

Do you know a Steven? We can help you help him. E-mail info@NoDropouts.com or call 1-855-NO-DROPOUTS

Anthony E. Meyer is a Director of Dr. Mehmet Oz’s HealthCorps.

Dr. Oz: Why ‘mentoring is the way to go’

When he’s not operating on patients, hosting a talk show or authoring books, Dr. Mehmet Oz devotes his time to his charity, HealthCorps, a Peace Corps-like program that sends college grads into high schools to mentor students on health and well-being. We spoke with Dr. Oz at a reception celebrating Evamor water’s partnership with HealthCorps, which will fund his mentoring program in additional schools across the U.S.

CRAIG BARRITT/GETTY IMAGES

Why is peer-to-peer mentoring the right approach to take to teach kids about their health?

Well, part of it is because I have kids. I was asked by their school to give a talk to them once about 10 years ago, and they seemed sort of bored but I gave the talk anyway. The next day, as I got to the hospital, I had probably a dozen phone calls from corporate executives, lawyers [and] other doctors saying their kids had come home that night and had told them things like “If you have a piece of bread, it’s like having a candy bar.” And it began a process in my mind: If we can get these kids to talk with each other in a way that makes it cool to push back against your parents, they’ll do it. I’m not the one to deliver that message, but I can get college kids to do it. I was working a lot with Timmy Shriver and Maria Shriver, and their father, Sargent, started the Peace Corps, so I put the two experiences together. I said, “You know what? We can create an organization where we use the same kind of enthusiastic energy that young college graduates have, put them back in schools around the country and allow for that unique experience when a 21-year-old talks to a 17-year-old.” I’m not the right person to deliver the message, but I can give the 21-year-old the information they need to make it happen. That was the foundation of the concept. And I think the best way of scaling a program, inexpensively building it and touching a lot of lives — mentoring is the way to go. These volunteers are able to go out and do a lot of good. And they only do it for a couple years — they go off to med school or whatever they want to do in life — but it gives them two years of really great experience and it gives us two years of their service, which is hugely valuable.

What are your goals for the program, and what are you doing to reach them?

I want to have HealthCorps schools in every major city in America, and I want to have them in every state. We may not be in every school, and I think one of the things we’re learning is that we can develop [the] best practices from the many schools we’re in that other schools can adopt and begin to use in their own programs. We’re gonna call it HealthCorps University. So either you’ll have one of my volunteers in your school who will teach your kids about health, and [for] anybody else, health teachers can take the syllabus and use it on their own. It’s written in a way that’s very accessible to high schoolers, and it’s free, so it takes away a lot of the obstacles to implementing it.

How can parents get involved?

The most important thing for parents to do is to get their kids to either use the website and the content on it or, more importantly, talk to their school systems about whether they can have a HealthCorps program there. What makes the school systems great is the teachers and the parents collaborating. We have wonderful programs that we have started primarily because parents went to schools and said, “I see this program, I want to have it.” And then [they] find some kind of a hybrid program that’s affordable and works.

MEREDITH ENGEL/METRO

NEW YORK

Published: January 23, 2012 7:49 p.m.

Last modified: January 23, 2012 7:53 p.m.

EXTEND HEALTH FILES REGISTRATION STATEMENT WITH SEC
FOR AN INITIAL PUBLIC OFFERING

SAN MATEO, Calif. – January 6, 2012 – Extend Health, Inc. today announced that it has filed a registration statement with the Securities and Exchange Commission for a proposed initial public offering of its common stock.  The number of shares to be sold and the price range for the proposed offering have not yet been determined.

Morgan Stanley & Co. LLC and Barclays Capital Inc. will act as joint book-running managers for the offering, and Wells Fargo Securities, LLC will act as a co-manager for the offering.

A registration statement relating to these securities has been filed with the Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

The offering will be made only by means of a prospectus.  Copies of the preliminary prospectus related to the offering may be obtained, when available, from Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2^nd Floor, New York, NY 10014, Telephone: 1-866-718-1649, or Email: prospectus@morganstanley.com; and Barclays Capital Inc., c/o Broadridge Financial Solutions, 1155 Long Island Ave., Edgewood, NY 11717, Telephone: 1-888-603-5847, or Email: barclaysprospectus@broadridge.com.

Investor Contact:
Jacquie Cuvelier

1-650-288-4790

jacquie.cuvelier@extendhealth.com

Media Contact:
Rob Wyse

1-212-920-1470

rob@WT221.com

Utah academy’s business is helping high school dropouts drop back in

Firm’s online learning model is benefitting students in six states.

By cathy mckitrick

The Salt Lake Tribune

Published: December 17, 2011 05:09PM
Updated: December 19, 2011 10:02AM
Michael Thomas, left, local advocate in Tampa, Fla., works with students in the American Academy’s No Dropouts program. Courtesy photo

The United States has roughly 35 million high school dropouts, a staggering number that continues to increase each day for any number of reasons.

But on the 11th floor of Salt Lake City’s Walker Center, employees in an innovative business venture reach out to mentor and educate this fractured population through online learning and the use of technology to keep in touch.

“Most [dropouts] are extremely bright and extremely capable. But there was some drastic event in their life that caused them not to be able to attend school,” said Jeff Beck, director of technology and media for The American Academy.

Whether detoured by a surprise pregnancy, social anxiety, legal trouble, financial woes, getting bullied or an illness — either their own or that of a family member — these lost students make up the target market for the Academy’s NoDropouts program.

The company also runs a private online high school, certified by the Northwest Accreditation Commission, which includes students from nearly every state in the nation — many of them too old to attend a public high school. But by far the biggest part of the business, and its recent growth, is the NoDropouts program, which seeks to serve the 5 million to 6 million high school-age youths who are not enrolled in school.

“Once they reach an age where they can’t attend school anymore, they become part of that 35 million,” said Gregg Rosann, the Academy’s co-founder and president. “So we try to move upstream and see if we can stem the tide much earlier in the process.”

To date, the Academy has graduated close to 60 students from its online high school, and 25 teens have earned diplomas through its dropout recovery program. About 600 kids signed up for NoDropouts in the past six months, Rosann added. Many need to finish 10 to 15 credits, he said, which is the equivalent of two to three years in a traditional school setting.

Within its 3,500 square feet of office space in downtown Salt Lake City, the Academy employs 18 people. Some serve as recruiters or online mentors and sit in cubicles papered with Post-it notes bearing student names. Others are stationed near stacks of laptop computers that are being prepared to ship to recent recruits.

The laptops are provided by through a partnership with Verizon Wireless and are offered to students for free in exchange for the privately held Academy paying for the students’ monthly wireless service. Where school district policies allow, students get to keep the computers, valued at $250 to $300.

For some students, Internet access can be counterproductive, and the Academy blocks certain sites and also adjusts Internet access based on progress.

“If they’re falling behind, we throttle back what they can access,” Rosann said. “We let them back on Facebook when they finish a defined number of assignments.”

Such issues as partnerships and computer policies represent growth that belies the Academy’s humble beginnings.

“We started in 2007,” Rosann said. “I was the first employee to come onboard.”

Rebekah Richards, who serves as the Academy’s chief academic officer, joined the startup when it consisted of “me and a card table,” Rosann said. Shortly thereafter, Beck signed on.

From the start, the Academy’s online curriculum was designed to give students the flexibility they needed in their day-to-day scheduling. As it expanded to include the NoDropouts program, a caring support network was established to help keep them on track.

“We were finding our way,” Rosann said. By 2009, the Academy began partnering with school districts “to help the 5 to 6 million kids not in school who should be.”

Today, the venture contracts with 41 districts in six states: Florida, Louisiana, Michigan, Nevada, Oregon and Washington (although not in Utah, but more about that later). In those locations, 40 local advocates have been hired to conduct weekly meetings with students and provide assistance, including connecting them with social services that can help them deal with some of life’s roadblocks. Pay ranges for advocates weren’t revealed, but many have second jobs.

School districts pay no upfront costs for the program and bear no financial risk, Rosann said of the Academy’s creative pay-per-performance model.

“The district recovers funds that are available to educate the child when the child re-enrolls in the district,” Rosann said. “They pay us a portion of that funding based on the student’s performance.”

Currently, the Academy has no direct competitors, Rosann said, because most virtual education companies have positioned themselves as rivals to school districts and offer cyber support for homeschooling.

“NoDropouts does the opposite,” Rosann said, by partnering with districts to bring their students back and furnishing the flexibility and support needed to overcome the obstacles causing the dropout dilemma.

Once all credits have been completed, the student receives a diploma from his or her home school and district, not from the Academy.

The Hillsborough County School District in Tampa, Fla., is the eighth-largest in the nation, with more than 200,000 students. Hillsborough contracted with the Academy earlier this year, handing over a list of 2,600 names that recruiters could begin contacting.

“Sometimes they’re not easy to find,” said enrollment counselor Bailey Nielson. “We have to go through relatives and friends to finally find the student.”

Once they’ve made contact and explained the program, the response is overwhelmingly positive.

“We very rarely get anyone who says they’re not interested,” Bailey said. “Over 90 percent sign up.”

Students make no financial commitment, but Rosann emphasized that NoDropouts is not a “come get a free laptop” program.

“We set a pretty high bar for them,” he said.

Students supply a list of friends and relatives they can count on for moral support as they pursue their diplomas. If a student fails to log in for a few days, these individuals are notified. And when a student does well on a test or completes a credit, those supporters hear about the progress so they can dish out praise.

Although the company capitalizes on technology to deliver its services, Rosann said the dropout recovery program is so much more than a computer, user name and password.

“It has to address that fact that these kids have complex lives,” Rosann said. “What we offer is local advocacy that clears away the roadblocks and clutter in their lives.”

Rosann and Beck rolled out a large map of Hillsborough’s district, speckled with red dots, each representing a dropout’s location. This visual aid helped the staff determine where to place its local advocates.

“There’s something about this district that’s really special,” Rosann beamed. “These kids are accruing credits at a really high rate — they’re super-engaged.”

Tampa’s local advocate, Michael Thomas, 38, probably has a lot to do with that.

With a bachelor’s degree in criminal justice and minor in psychology, coupled with almost two decades of social work experience, Thomas was well-equipped for the new role he took on in July.

At one point, one of his students called him to say he’d have to leave the program because his mother was kicking him out of the house. Thomas spent several hours setting up shelter for the boy, but also contacted the mother to broker a dialogue between her and her son.

“They were able to talk through their issues,” Thomas said. “And he’s still in the program today.

“This program is a trailblazer,” he added, noting that it was “like fireworks” when he launched the weekly student meet-ups. “Kids are coming out of the woodwork, and they’re excited.”

For one thing, Thomas offers his students hope that productive doors can open as they increase their level of education.

“The economy has been my soapbox to keep them encouraged,” Thomas said.

“A big part of it is mentoring these kids and helping them understand what it will take to get to graduation,” Rosann said. “So we do a lot of expectation setting.”

The software is set up so that every day when students log on, they see their individualized graduation goal, but right next to that are the number of assignments they personally need to accomplish that day.

“We hear often from our kids that this is the first time they understood clearly what they’re required to do to get a final grade,” Rosann said.

About 60 percent of Thomas’ students are female, and many are single mothers.

“They come from all nationalities. I’m seeing myriad situations,” Thomas said, noting that some have strong family support and others are having to make it on their own.

“It can be intense, at other times fun and lighthearted. But I try to make them stay focused and maximize that window that we have.”

His greatest reward so far, Thomas said, is “participating in a life being turned around.”

One student, Edwin, needs one more credit to graduate and has earned A’s and B’s in his coursework.

“He’ll be one of our first grads in the state of Florida,” Thomas said. And if Edwin chooses to participate in his school’s graduation ceremony, Thomas said he plans to be in the audience.

By year’s end, Rosann expects the company’s student numbers to reach 1,000 and to increase to 2,500 by the end of 2012. By 2016, he projects that 18,000 will tap the Academy’s programs.

“As enrollment continues to grow, the Academy’s staff will grow,” Rosann said. “The company expects to have 150 to 200 employees in the next four years.”

At present, the Academy is unable to contract with Utah’s school districts.

Some states had laws and policies that were more conducive than others for the Academy’s dropout recovery initiative, Rosann said. Now that the program is established in six states, the Academy is working with Utah’s office of education to determine what steps are needed to provide the services here.

“Obviously it means a lot to us to be able to do it in our own backyard,” Rosann said.

For 16-year-old Shalana Klemann of Southfield, Mich., signing on with NoDropouts has kept her on track when no other options would have worked.

Since eighth grade, Klemann has suffered from social anxiety disorder. Although her “people phobia” keeps her from face-to-face encounters in brick-and-mortar classrooms, her mind continues to search for knowledge.

Thanks to NoDropouts, Klemann is at the 11th-grade level earning a 3.9 GPA and expects to graduate by 2013. She hopes to pursue college courses in the legal or medical field.

“Not many people have seen a case like mine,” Klemann said. “Everyone’s hoping that my panic attacks will decrease.”

In the meantime, Klemann is building success, one online credit at a time.

“It’s truly a heaven-sent program,” she said.

cmckitrick@sltrib.com

Twitter: @catmck

—

Education level and average annual income

$19,540 • High school dropout

$27,380 • High school diploma

$36,190 • Associate’s degree

$46.930 • Bachelor’s degree

Source: U.S. Department of Education

© 2011 The Salt Lake Tribune

November 1, 2011

Spurring Growth on Boston’s Waterfront

By SUSAN DIESENHOUSE

BOSTON — When Vertex Pharmaceuticals agreed this year to move into an as-yet-unbuilt waterfront office complex, it made history as the city’s largest commercial lease at 1.1 million square feet, with a rent of $72.5 million a year. But more important for the city over all, the huge deal has spurred growth and eased the way for financing other projects.

The Fallon Company is developing the $900 million office and laboratory complex for Vertex on Fan Pier, across Fort Point Channel a few blocks from downtown. Vertex, which is based in Cambridge, Mass., also has leased 60,000 square feet in One Marina Park Drive, an office building completed by Fallon a year ago, and has an option on a possible 300,000-square-foot building, also on Fan Pier.

Vertex’s plan to fill the complex, now under construction, with some 1,800 highly paid workers may inject new economic vitality into the 1,000-acre waterfront. Since the 1980s, billions have been invested in public infrastructure and planning, and in other scattered commercial developments in the area.

“The momentum for economic growth has been building for some time,” said Mary A. Burke, a senior economist at the Federal Reserve Bank of Boston, “and Vertex could give it a big push.”

She said more growth could follow once Vertex occupied the two-building complex, much as has been the case with the expanding life science industry in the Kendall Square area of Cambridge, where restaurants, stores, hotels and housing have accompanied new labs and offices. For example, Fallon plans to build a 150-unit luxury high-rise condominium at Fan Pier next fall.

Developers with a financial stake in the waterfront said the Vertex deal would help with leasing retail, office and residential space, and securing financing.

“The Vertex project is an incentive for everyone to get moving,” said Stephen R. Karp, the chairman and chief executive of New England Development. After 10 years of planning and waiting, Mr. Karp and the Hanover Group last month won a financial commitment from a real estate investment trust and will start construction this spring on a 21-story, 356-unit rental apartment building on Pier 4, adjacent to Fan Pier.

Mr. Karp is considering building a hotel on the parcel, which has permits for one million square feet of mixed-use development, he said. “Finally, the waterfront is really happening,” he said.

The Vertex start is a tipping point that makes the waterfront a viable location for commercial development, said John Fowler, the managing director of HFF, a commercial mortgage brokerage that secured $355 million in financing for the life science project, which is a joint venture between Fallon and Mass Mutual Financial Group, a partnership that invested $450 million in equity.

It is also good news for John P. Buza, a managing director of Morgan Stanley, which with Boston Global Investors is developing Seaport Square, a 6.3-million-square foot, 23-block mixed-use project across the street from the Vertex site. The partnership is selling land to WS Development Associates for 1.2 million square feet of retail space and to AvalonBay Communities for some 700 rental apartments, both of which plan to start construction in the spring, he said.

“Vertex shows our retail and multifamily investors that there will be tenants down there,” Mr. Buza said.

Huge infrastructure projects have made waterfront development more viable. Since the 1990s, about $4 billion in public money went to clean Boston Harbor and $16 billion for the Big Dig, which demolished an elevated highway separating downtown from the waterfront and installed new highways, tunnels, bridges and roads downtown and through the waterfront.

Two years ago, to attract new businesses and younger residents, Mayor Thomas M. Menino branded the waterfront as the Innovation District. Previously, his administration rezoned the area to require a mix of development uses, open space and corridors with clear views of the water. The city has negotiated incentives to attract business. For Vertex, Mr. Menino helped secure $12 million in tax relief and $50 million in infrastructure financing backed by the city and state.

“Seven years ago, we could have developed the area with offices, residential towers and a little retail, but the waterfront is special,” he said. Now, these development sites call for public green space, access to the waterfront, incubator space for start-ups or affordable housing. “In the past 18 months, we’ve attracted 90 new businesses with 2,300 jobs,” Mr. Menino said.

Some of the new restaurants moved into Liberty Wharf, developed by the Cresset Group, which opened last spring and has been packed since.

“There’s terrific buzz and activity at the waterfront,” said Andrew Hoar, the president of CB Richard Ellis New England, who noted that much of the downtown leasing last quarter was around the harbor. He predicted it would be the fastest-growing downtown submarket in the next three years, drawing tenants from other downtown locations and neighboring communities like Cambridge, Watertown and Somerville.

Even so, it is unlikely that the waterfront will displace Cambridge as the area center for life sciences, said Mats Johansson, the president of Skanska USA Commercial Development, which has started construction on a $70 million lab in East Cambridge without a tenant.

With Harvard and M.I.T. there, Mr. Johansson said, “Cambridge is a brainpower market with a mix of biotech, finance and academia; sectors that will drive the U.S. economy back on track.”

Biogen Idec, a biotech company that seven months ago moved 700 of its employees to a new 356,000-square-foot campus in suburban Weston, Mass., is now having two buildings developed near Kendall Square; one by Boston Properties, the other by Alexandria Real Estate Equities.

Ground was broken last week on the buildings, which will reunite the 700 business employees with 1,300 research and production workers who stayed in Cambridge.

“We need the close collaboration to make decisions quickly,” said George A. Scangos, the chief executive of Biogen. “Vertex moving out will be a ripple for Cambridge, where there’s the world’s biggest concentration of life science companies, the universities and where big pharma like Novartis, Sanofi Aventis, Merck and Amgen continue to expand.”

Joseph F. Fallon, the chief executive and president of the Fallon Company, who has also developed two hotels and a multifamily building on the waterfront, was able to keep the Vertex deal alive after 2008 when the financing, through Lehman Brothers and Goldman Sachs, vanished. Then last spring Vertex won Food and Drug Administration approval for a hepatitis C treatment called telaprevir, and expanded its commitment to two buildings from one.

Mr. Fallon said he has a waiting list of 50 buyers for his new condominium project. It has been several years since the last waterfront luxury condominium opened, he said, and he can offer unimpeded water views, on three sides, in a newly vibrant neighborhood.

“When Vertex moves in,” he said, “we’ll have more buyers.”

ZUJAJA TAUQEER, CUNY’S 2011 RHODES SCHOLAR, is exceptional but not the
exception. CUNY students are winning more highly competitive awards
and scholarships than at any time in our history. The City University of
New York is attracting an ever-growing number of outstanding students. Our
Macaulay Honors College is home to many of this year’s winners. Assisted by a
world-class faculty, they achieved their success studying at the nation’s leading
urban public university. They are exceptional but not the exception.

By MELANIE GRAYCE WEST

On Sunday night, Whitney Tilson sent an email to people he knew urging them to support aid agencies working to address the famine in Somalia. As an incentive to give, he offered to match every gift given up to $100 each.

The 44-year-old founder and managing partner of T2 Partners LLC, a New York-based hedge fund, says he sent the email to roughly 10,000 people, drawn from his professional and philanthropic contacts. He figured 20 people might respond with $100 each and “maybe a couple people more than that” would give a slightly larger gift, he says.

Since Sunday, the response to his email has been overwhelming. Mr. Tilson has personally matched the first $10,000 in gifts. In addition, 10 of Mr. Tilson’s friends have kicked in an additional $175,000 in matching dollars. Those friends include: Ciccio Azzollini, chief executive of Cattolica Partecipazioni SpA; Jeff Kaplan, a partner of Deerfield Partners; Anthony Meyer, president of Ocean Road Advisors; and Chris Stavrou, owner of Stavrou Partners.

Now, Mr. Tilson needs 1,750 people to step up to see their $100 donations matched. “Just email me,” he says, and forward on your donation receipt as verification.

So far, donations have ranged from $18 to a matching gift of $100,000, with most coming in at exactly $100. Most of the donations have been directed to the global poverty organization, CARE, with other gifts going to Save the Children, Doctors Without Borders and the International Rescue Committee, among others.

Provided the donation supports famine-relief work in Somalia, Mr. Tilson says that he will see the gift is matched.

Mr. Tilson’s primary philanthropic interests have mainly been in education—he’s passionate about education reform in the U.S.—and he says he’s never helped to raise money for disaster or relief work. He just decided to do something with the hope that the offer would get passed around, posted to Facebook and “go viral,” he says. “It took me half an hour to craft a compelling email and I’ve never made an offer to match philanthropically like that.”

Mr. Tilson is involved with a few nonprofits that work in Africa and has traveled to various countries. He spent some of his childhood in Tanzania, and his parents, both educators, were members of the Peace Corps. Now retired, they live in Kenya. His sister, also living in Kenya, is involved with women’s public health in Africa.

But Mr. Tilson says his email was mostly born out of reading recent news reports and seeing photos of the famine in Somalia.

“I’ve got three of my own kids and seeing parents there holding their kids while they die of starvation is pretty tough,” he says. “I suspect those pictures probably impacted the people who gave the same way they impacted me.”

Health-Care Deal Could Open Door to More Options

Insurers WellPoint, Health Care Service, and Blue Cross Blue Shield of Michigan bought an ownership stake in private health-care exchange Bloom Health this week, marking one of the first big moves by traditional insurers into the types of exchanges that could be used under the Obama Administration’s health-care overhaul. Leveraging the Bloom Health acquisition, WellPoint and the other insurers plan to offer exchanges on a limited basis in 2012, and become fully operational by 2013.

While the new law will require U.S. states to run their own exchanges, a corporate exchange could be a middle ground between keeping a group plan and leaving employees to use the state exchanges. Regulations that would affect corporate exchanges are still being written, so most companies will probably want to wait for the new laws to take effect in 2014 before deciding whether to use them.

According to Bryce Williams, CEO of health-care exchange operator Extend Health, such corporate exchanges could offer companies an alternative to buying group plans from a health insurer. According to Williams, it could look something like this:

To use an exchange system, employers would cancel their group plan and pay the government penalty (around $2,000 to $3,000 per employee); Employers then set up and fund contributions to a Health Reimbursement Arrangement for each individual employee; They would then direct employees to a health-care exchange where they could use those funds; Employees, with the help of benefits advisors, could shop for their own full insurance plan on the exchange.

“It would be the same overall shift from defined benefit plans to defined contribution plans as in pensions,” Williams said, as some of the responsibility for health-care choices would be shifted to employees.

Health-care exchanges are now mostly used for corporate retirees at companies including Ford, Chrysler and Caterpillar, so that they can supplement their Medicare. Companies that use them have seen their retiree health plan costs come down as insurers have to compete against each other to attract retirees on the exchanges, Williams said. Ford, for example, estimates it saves $80 million a year by using the exchange, and reduces health-care liabilities on its balance sheet.

Nationally, the average cost of providing employee health insurance plans was $9,562 in 2010 according to Mercer, so even with the penalties, the upcoming exchanges may reduce costs for some companies.

Copyright 2008 Dow Jones & Company, Inc. All Rights Reserved