HEALTH BENEFITS: Some Groups Try New Approach
Some employers are undertaking an experiment that "is likely to change the health care system as radically in the coming decade as managed care did in the last" by allowing employees to choose their own health care plan, the Wall Street Journal reports. The idea has been spurred by a number of factors including the popularity of 401(k) retirement plans that give employees more control over their savings, the backlash against managed care and the increasing number of Web sites that provide information about health plans and providers. While the change is unlikely to happen immediately, some companies already have tried giving employees more control. The "defined-contribution" health benefits plan is one option. Under the agreement, employers provide a set amount of money and allow employees to choose their plan. If they prefer a more costly plan, employees pay the difference out-of-pocket. Xerox Corp. has already used a similar plan with one twist, if employees use less than their allowance, they can roll over the balance to other benefits such as disability or dental insurance. The Minneapolis-based Carlson Cos., a travel and food-service company, uses a similar allowance system. To assist employees in making choices about health care providers, Carlson uses a buyer's coalition to provide information and help negotiate rates. The Wall Street Journal reports that both companies' plans resemble the voucher system approach to health care supported by Democratic Presidential hopeful Bill Bradley. Ingersoll-Rand Co. uses a different employee-based plan. This year, the company offered employees the option of choosing a low-cost catastrophic illness insurance plan that starts after the family's one-year medical expenses have reached $5,000. The company provides a $500 use-it-or-lose-it medical spending account to promote checkups. but employees are responsible for the $4,500 gap. The theory behind such a plan is that employees will be less likely to choose costly diagnostic tests if they are not necessary.
Will It Work?
The approach does have some opponents who argue that employers are simply trying to rid themselves of the responsibility of providing health benefits. And some point to a earlier failed attempt at a similar plan that lost favor when medical costs outpaced company contributions. Another hinderance is the need to revamp tax code laws to accommodate the shift in benefits. However, some companies maintain that they will not leave their employees high and dry. With the current job market tight, employers are loathe to tamper with benefits. In addition, companies argue that they want to maintain some clout in the industry to ensure that plans and providers are offering quality care. Also aiding the movement toward employee-controlled health benefits is the increasing number of Web sites that offer consumers information about the quality and costs of health plans and providers. Further, Congress is set to debate a measure that would make employers liable for health care-related decisions (Winslow/Gentry, 2/8).