MANAGED CARE March 2002. ©MediMedia USA
The biggest threat to managed care as now practiced may be this new scheme, defined contribution. Even more than the Patients' Bill of Rights, this is a movement that could shake the industry. But as seen in our cover story [1], the term "defined contribution" covers a range of financing and delivery mechanisms.
In pure defined contribution, the employer hands the worker some pretax earnings and says, buy yourself some health care. That model isn't seen too often. In other models, the employer retains some control, but care often is not prepaid, as it is in an HMO.
We at Managed Care understand employers' desire to make workers feel the pain of health care premium inflation so that they will have an incentive to moderate their consumption, but we are highly skeptical of "solutions" that would drive healthy young workers into low-cost plans and herd sicker folk into other types of plans. For generations, employer-sponsored health coverage has minimized the variation in workers' out-of-pocket costs, and nobody ever warned today's older workers, who dutifully subsidized their elders' care in the past, that we would cancel the deal when they started to need care for more serious conditions.
You will hear people call these new plans "consumer-driven" and call the movement "consumerism." It is true that the new systems require the patient to make decisions, and there may be much good in that. But "consumerism" and "consumer-driven" imply that the impetus for these systems came from consumers. That's untrue. Consumers want choice of providers, and the Patients' Bill of Rights began as a consumer bill. But the defined contribution movement is being forced on workers by employers. And there are serious concerns about whether it will result in better health care — or worse. It certainly will be a challenge to HMOs.