BUSINESSSome insurers embracing defined contribution plansIn these plans, targeted to small businesses, employers choose the insurance company and pay a monthly amount for employees, who pick from several health plans.By Julie A. Jacob, amednews staff. March 12, 2001.
Managed Care: What's Next?"
With the managed care system drawing complaints from all quarters, doctors, patients, payers and even insurers themselves found themselves looking for alternatives to a concept that hadn't met its promise of improving care while reducing costs. This 2000-02 occasional series highlighted what physicians and others were doing to come up with a way to improve the system -- or replace it with something else. The much-ballyhooed idea of defined contribution health benefits -- or at least a modified version of it -- is beginning to move from theory to reality. Blue Cross of California and Myhealthbank Inc. in Portland, Ore., have both introduced modified versions of defined contribution health plans targeted to small businesses. Representatives from Blue Cross of California, a subsidiary of Thousand Oaks, Calif.-based WellPoint Health Networks Inc., and Myhealthbank, say their plans combine the best of a defined contribution approach and traditional employee health benefits. They point out that their plans allow employers to fix their health care costs at a stable rate, give employees a broad range of health plans -- and thus physicians and hospitals -- from which to choose, yet preserve the traditional employee health benefit advantages of employer administration and group rates. "This doesn't get employers out of the middle, but we feel it will increase employee satisfaction because employees will have access to such a wide range of benefits and price points," said Deborah Lachman, senior vice president for small group services at Blue Cross of California. Myhealthbank's CEO Dave Sanders, MD, described his company's program as a "first step" toward "moving the economic control from employer to employee." Defined contribution has been the buzzword among employee benefits specialists over the past year or so. A defined contribution approach is commonly described as a system in which employers give employees a set amount of money each year to purchase a health plan on their own. Although the concept has been touted as a solution to soaring employer health care costs, no large corporation has yet embraced the idea.
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Copyright 2001 American Medical Association. All rights reserved.
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