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The Business of
Health Care Report Amid a growing anxiety over their liability in providing health coverage to employees, companies of all sizes are looking for new alternatives. Increasingly, companies want to end their role as the middle-man between their employees and the insurance companies. This anxiety is spurring a growing trend away from where employers contracting insurance companies directly to one where employers give employees funds to purchase their own insurance in the open marketplace. Employers are considering shifting from defined benefit health plans to defined contribution health plans, giving workers more choice and flexibility in selecting their health benefits. Defined contribution health plans work like this:
Married employees might combine their defined contribution benefits with those of their spouse and select a joint plan, freeing up some money for other health benefits such as a contribution to medical savings accounts. Despite the growing interest, few employers have adopted defined contributions for health benefits. With a tight labor market, employers are cautious about making any changes that employees might perceive as a reduction in benefits. Also, depending on the approach taken, employers and employees could lose the benefit of tax subsidies, risk pooling and bargaining clout with insurers. Whether these plans catch on at a time when it's difficult for employers to attract and retain qualified workers remains to be seen. Stay tuned to the Business of Health Care report on NewsRadio 1080 KRLD and here on www.TexasHealth.org. If you have any questions about the business of health care, contact me at DougHawthorne@TexasHealth.org. ©
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