Health Care Checkup

Recent reporting by the Employee Benefit Research Institute indicates a rise in employer interest in "defined contribution" health benefits and the private health insurance exchanges that could become the vehicle for delivering these benefits, following the recent Supreme Court ruling upholding of the Patient Protection and Affordable Care Act (PPACA). According to the July 2012 EBRI report "Private Health Insurance Exchanges and Defined Contribution Health Plans: Is It Déjà Vu All Over Again?," the health insurance exchanges, in tandem with a defined-contribution funding approach, can accelerate the drive toward a more consumer-driven insurance market, allowing employers to gain more control over their health-care contribution costs, cap contributions, and shift to employees the authority to better control the terms—and to some extent, the costs—of their own health insurance.

The report underscores that as defined-contribution health benefits plans gain popularity, potential advantages await both employers (e.g., a higher degree of cost certainty) and employees (e.g., greater choice of plans and portability). The EBRI report examines issues related to private health insurance exchanges; possible structures of an exchange; and the funding of this approach, as well as the pros, cons, and uncertainties to employers of adopting them. It also reviews recent surveys on employer attitudes and some changes that employers have made to other benefits that might serve as historical precedents for a move toward a defined-contribution approach to health benefits.

Is your institution moving in this direction? Let us know how PPACA implementation is pushing your institution in new directions. E-mail karlahignite@msn.com to share a brief description of the changes you are enacting and key challenges and concerns you are encountering along the way.