Shifting Responsibilities: Models of Defined Contribution

March 1, 2001

In the current health care marketplace – which is dominated by employer-sponsored insurance – striking a balance between what employees want and what employers can give them is difficult. The managed care backlash has spurred an increasing demand for choice from consumers, while employers, faced with rising health care costs each year, try to balance the satisfaction of workers with their own bottom line. Although not a new concept, the defined contribution approach – in which employers pay a fixed amount for their workers’ health care benefits, but share or relinquish the management of such benefits – is being discussed as a possible solution.