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EBRI Analysts Cool On Defined-Contribution Health Plans

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NU Online News Service, June 26, 2:44 p.m. – The Employee Benefit Research Institute, Washington, has put out an analysis questioning whether the new, widely publicized “defined-contribution” health plans will do much to control health care costs.

The typical defined-contribution health plan combines high-deductible, catastrophic health insurance with employer-funded personal health care accounts. Employers usually contribute a set amount per employee.

Many plan administrators try to give members detailed information about the fees that in-network doctors and hospitals charge, to encourage members to consider cost when shopping for medical care.

Organizers of the plans say they can help control costs by tearing away the artificial barriers that now keep consumers from learning how much their care really costs.

EBRI analysts present no evidence about the performance of the defined-contribution plans that already exist.

But the analysts predict the effects of employer-sponsored defined-contribution plans will be relatively modest, because employer-sponsored plans finance only 27% of U.S. health care expenditures, and workers at many companies may resist the idea of switching to a new health insurance system.

Moreover, the analysts argue, even if a shift to the defined-contribution approach leads to the kind of increase in efficiency that the shift to managed care brought about, the shift can do little to control the cost increases that result from advances in medical technology.