Will employees be able to shop for their own health insurance?

Consumer-controlled health plans on horizon

MORE AND MORE BUSINESSES ARE DIScussing dropping their employee health insurance benefits in favor of giving workers money (a "defined contribution") to buy their own medical care directly, according to health care experts.

Booz-Allen & Hamilton reportedly conducted a survey of Fortune magazine's "100 Best Companies to Work for" recently and found that most of these top employers intend to shift to a defined-contribution health care plan during the next 10 years to better manage rising employee medical costs.

"A quiet revolution in health care benefits is coming, as employees are placed in the driver's seat for selecting their own health plans in an open market," according to Booz-Allen & Hamilton consultant Gary Ahlquist in "Integrated Health Care Delivery Systems," on Internet site MrLTC.com.

A defined-contribution health care plan mirrors the 401(k) pension concept in that employers give employee-participants money to purchase health benefits that suit their needs. Under this system, employees would create their own network of providers who set their own fees from a Web-based menu supplied by an outside vendor.

Further, the amount an employer would contribute to each worker's health account would be based on accrual calculations using the worker's age and number of dependents--not unlike the way most firms currently determine their projected health care costs. The difference is that an employer's outlay would be set at a fixed annual amount. Providers, in general, reportedly are responding positively to the idea because it would permit them to set their own reimbursement rates, be paid directly by patients, and not have to deal with managed-care paperwork and contracts.

However, most polls show that consumers prefer the current employer-based health system over a defined-contribution one.