Washington Post Looks into Defined-Contribution Plans

The Washington Post on July 28 examined defined-contribution plans, in which employers allocate an annual "allowance" that workers can use to pay for medical expenses such as office visits, diagnostic tests and prescriptions, as well as other services not covered by traditional managed care plans, including laser eye surgery. After workers use the money in the accounts, they must pay out of pocket for a certain amount before they meet a deductible; after that, "traditional" coverage usually takes effect. Employers say that managed care's system of copayments, which can shield consumers from the cost of care, "has trained employees to become a bit complacent -- even frivolous -- about their health care habits." Paul Fronstin, an analyst with the Employee Benefit Research Institute, said, "The goal is: If employees think it's their own money they are spending, they are not going to spend it as much." Still, William McGuire, chair of United Healthcare Group, a managed care organization, said that many workers are not "armed with enough information" to make the decision to join a medical-spending account plan. With only a "handful" of large American employers offering the plans this year, some experts say it is "far too early to say" if the plans will be successful, the Post reports (Brubaker, Washington Post, 7/28). The full article is available at online.