News and Commentary

HMOs: Watch Out For Internet-Based Benefit Managers


Forrester Research predicts that Internet-based companies that help people manage their employer-sponsored benefits will become a force by 2005.

Bradford Holmes, a senior analyst at Forrester, says the so-called e-health plan industry will chew off 3 percent of HMO profits this year; by next year, 24 percent of companies could offer at least one e-health choice for benefit coverage. Employers frustrated by rising costs would welcome the opportunity to shift at least some responsibility for benefit and utilization decisions to individuals, Holmes argues. Early experimentation with e-health plans could involve personalization of benefit design, such as letting employees select copayment/payroll contribution tradeoffs at open-enrollment time — something most people would be comfortable with.

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