New Report Examines Shifts in Responsibility as Employers Consider Relinquishing Health Benefits Management

2/14/2002

From: LeAnne DeFrancesco or Katie Martin, 202-292-6700, both of the Academy for Health Services Research and Health Policy; Web site: www.academyhealth.org

WASHINGTON, Feb. 14 -- A new report released today by The Robert Wood Johnson Foundation's "Changes in Health Care Financing and Organization" (HCFO) program examines the issues employers face when evaluating the defined contribution approach to health benefits management. The report, "Shifting Responsibilities: Models of Defined Contribution," identifies the implementation issues of four defined contribution models, including tax policy and risk segmentation.

"The managed care backlash has spurred an increasing demand for choice from consumers, while employers face rising costs each year," says Kathryn Martin, HCFO associate and author of the report. The defined contribution approach -- in which employers provide a set amount of money for their workers' health care benefits, but share or relinquish the management of such benefits -- has been identified as a possible way to satisfy both sides.

The report reviews existing literature on defined contribution and presents a typology of four defined contribution models, focusing on how they affect the decisions that employers, consumers, and health plans must make. It also outlines product options, contracting requirements, and responsibilities of both employers and employees in the four models.

"Although much has been written about defined contribution, implications for risk selection and tax policy have largely been ignored," says Anne K. Gauthier, director of the HCFO program. "This report analyzes how the four models would be affected by these issues, which are critically important to employers."

For copies of the report, visit the HCFO Web site at www.hcfo.net. For hard copies, e-mail defrancesco@ahsrhp.org.

The Academy for Health Services Research and Health Policy (www.academyhealth.org) serves as the national program office for the HCFO program. The program's mission is to serve as a bridge between the policy and research communities, funding the production of useable and timely information on health care policy and market developments for dissemination to stakeholders in the public and private policy arenas.