But critics argue that such an approach can stick customers with bigger bills if the employer’s set contribution doesn’t rise over the years to match growing health insurance costs. And that could mean that employees would be forced to switch to cheaper plans that offer less coverage over time, says Cutler, the Harvard economist who advised the 2008 Obama campaign on health care.
“That’s a very big risk,” he says.
And workers may find educating themselves about health insurance daunting. “I think people are going to have to spend more time understanding their options,” says Paul Fronstin, an economist with the Employee Benefit Research Institute. “There are all kinds of dimensions of information you’ll be provided, potentially.”
Mark Pauly, a University of Pennsylvania health economist, agrees. He says there’s an “enormous amount of inertia” among consumers when it comes to shopping for the right insurance plan.
“Life’s too short to spend all your time worrying about health insurance,” he says.
Despite the possible downsides, insurers say defined contribution plans are becoming more common. WellPoint Chief Financial Officer Wayne DeVeydt says he expects interest in the plans to pick up in the coming years.
“Right now employers are really trying to understand what the health care landscape will look like,” he says.
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