Health care exchange company Liazon Corp. has teamed up with Western New York's No. 2 health insurer, allowing Independent Health Association to begin offering a choice of insurance and other benefits to its small employer groups through Liazon's online marketplace.

The agreement provides Independent Health and its clients an opportunity to learn more about what a public government exchange – as envisioned under national health care reforms – might look like in the future.

Companies with 50 or fewer employees can sign up for Liazon's Bright Choices Exchange in which employees get a fixed amount of money each year and shop for what they want from the menu of selections, including five health plans and other options.

"What we're allowing consumers to do is make choices, where their employer was making choices for them," said David Donovan, Independent Health's vice president of sales. "That'll be pretty similar to what Independent Health anticipates the public exchange to be."

Liazon said its model is designed to enable employers to save money on health care costs and set predictable budgets, while giving consumers more choices than they would typically get. Officials noted that for many employees today, their employer chooses a limited array of health plan options, or even just one, and then pays a portion of the premium. With an exchange, the employer doesn't make as many decisions, but simply allocates one total sum for each employee to spend as they see fit.

Independent Health began marketing the exchange quietly, enrolling one client: The Buffalo Museum of Science. Others are pending, Donovan said.

Liazon was founded in 2007 by Ashok Subramanian, Tim Godzich and Alan Cohen and launched its Bright Choices product a year later as an online benefits marketplace or store for small and medium-sized businesses.

Its model predated the Obama administration's health care reforms, but is now widely seen as an example of what such a government exchange could look like. Other national brokerage firms, such as Mercer and Aon Hewitt, have introduced their own similar services recently, snagging major national companies like Sears Holdings Corp. and Darden Restaurants as exchange clients.

But while Liazon's Bright Choices might mimic a public exchange, it's not threatened by the new entities, Subramanian said. Consumers who would use the public exchange, with government subsidies and few alternatives, are not the same ones who would get coverage through their employers, estimated at more than 130 million people.

"At the end of the day, we're not competing with the public exchange. There could be a partnership, but we're not competing," Subramanian said.

The deal marks Liazon's second big partnership with an upstate health insurer in recent weeks. It signed a similar arrangement with Schenectady-based MVP Health Care last month. It already had a partnership with Univera Healthcare, which then linked it up with the Buffalo Niagara Partnership to offer benefits to that organization's members.

Originally, it had tried to add employer groups through direct sales, but the company changed its business model recently, turning to insurers and brokers for marketing and sales.

"We're excited to continue to branch out locally here with Independent Health," Subramanian said. "We've gotten a lot of feedback from clients that they'd love to see an Independent Health option, so we're really excited to be able to deliver."

Today, Liazon works with 25 national and regional insurers, and serves over 2,000 businesses nationwide. Based in Buffalo with 60 employees here and 75 overall, the company also has offices in Waltham, Mass., and New York City.

Former U.S. Secretary of Health and Human Services Tommy Thompson is an adviser. And it has raised ?$35 million in capital since 2007, including from investors such as Bain Capital Ventures, Bessemer Venture Partners, Fidelity Biosciences and Buffalo-based Rand Capital.

"We've created some more confidence with partners all around the country, so I'm excited and focused on the future and what we're trying to build here," Subramanian said. "The fact that we're ahead of the curve and companies want to work with us – we've certainly shown our street credibility in terms of making this real."