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Defined Contributions: The Search for a New Vision

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Publication Date: April 2001

Publisher(s): Center for Studying Health System Change

Author(s): Sally Trude

Series: Issue Brief No. 37

Topic: Health (Health care financing)

Type: Brief


Proponents of defined contributions for health benefits seek to broaden choice and control costs by raising employees’ cost awareness. Although defined contributions for health benefits have sparked considerable debate, they have not yet caught on with large employers. Given the tight labor market and consumer resistance to paying more for health care, employers are not expected to adopt defined contributions in the short term, according to a panel of business and union representatives at a recent Center for Studying Health System Change (HSC) conference. This Issue Brief presents experts’ outlooks on how likely employers are to embrace defined contributions, their views on the advantages and disadvantages and the potential for Internet solutions. Implications for policy makers are discussed.