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Submitted Article |
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Submitted Article |
With any new emerging system, there are competing models for consideration as the market evolves. The discussion of defined contributions includes such varying concepts and scenarios. Defined Care is the model that encompasses delivery of care in a defined contribution environment, where defined contributions still are administered on a group (employer sponsored) basis.
Some structures under discussion regarding defined contributions do not address the impact on delivery of care, and some do not envision administration on a group basis. Thus there are some structures involving defined contribution that do not fit the model of defined care.
A non-group based defined contribution voucher system is the most talked structure that wouldn’t fall under the definition of defined care. A number of defined contribution internet start-ups are looking to growth in the voucher concept as a major market opportunity.
Defined Care assumes that employers wish to become less involved in the provision of group benefits. The voucher concept goes further and assumes that employers desire to disassociate themselves from group benefits altogether. The employer would issue a defined contribution voucher to employees, the employer would cease to directly provide group benefits, and the employees would use the vouchers to obtain benefits on an individual basis.
The voucher system does go the furthest is reducing employer involvement and increasing consumer involvement, which are both stated goals of defined care as well. However, the numerous issues quickly surface in a discussion of the voucher system, including:
Obviously certain legislative changes could address these problems, and a handful of states have an environment much more favorable to vouchers than others. Specific restrictions and limitations on underwriting, age rating and premium rate setting practices can create a more favorable individual product market.
A voucher system places the maximum responsibility in the hands of the consumer, and minimum responsibility to the employer, and goes furthest in separating employers from the provision of benefits. However, until the day comes when the employee consumer has a level playing field in regard to access to these benefits, there are some serious structural issues to consider.
Now let’s shift gears from the employer group setting to the Medicare setting, and the dynamics change considerably. Medicare benefits are already primarily an individual market, and there are significant federal protections regarding underwriting for Medicare supplements and +Choice plans. Employer groups with covered retiree populations do not have the same degree of downside in considering a voucher system for the short-term.
Furthermore, the voucher system remains a policy proposal being touted by various players in the political debate as a replacement to the current Medicare+Choice system. Under these proposals, the government issues the vouchers directly to Medicare beneficiaries, who then select plans from the private sector. As in the case of employers in the group employee setting, the degree that the government would get involved in what plans were available for voucher purchase by Medicare beneficiaries and under what rules they were priced and operated would be a major issue.
Clive Riddle is President of MCOL, the Internet’s leading business-to-business managed care resource company, available on the web at www.mcol.com. Mr. Riddle and MCOL are nationally recognized thought leaders in the area of defined care. Additional information on defined care is available at www.definedcare.com
The Defined Care web site is provided as a free service of MCOL, positioning you for a new kind of healthcare.
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