Employers Redefining Health Plans

Because of the bad publicity defined-contribution retirement savings programs have been getting recently as a result of the collapse of Enron Corp., Houston, many of the companies organizing the programs prefer terms such as "self-directed."

U.S. employers began offering voluntary defined-contribution health programs to hundreds of thousands of employees in January. First-year enrollment in the programs is often low. "Employees need to be educated on what these programs are and how to use them," Sinni says.

But the employees who have signed up seem to like the programs, and early returns suggest that defined-contribution programs can cut costs by 7% to 18%, Sinni says.

Some experts have wondered whether skyrocketing costs might lead to a return of restrictive health maintenance organizations. So far, Sinni sees little interest in a shift back to the traditional HMO approach. Employers still want to give employees' more choices and easier access to care, and they also want to avoid the liability issues associated with limiting access to care, Sinni says.

But Sinni continues to see interest in a new generation of programs for managing chronic conditions such as diabetes.

Disease-management programs showed disappointing results when HMOs introduced them four or five years ago, Sinni says. But, in spite of the problems of the original programs, he finds that many employers would love to find a way to make the concept work, to cut their companies' health coverage costs while improving the lives of the affected workers.