The defined-contribution plan: the next generation of healthcare financing

In response to rising health insurance premiums, many purchasers of coverage are evaluating the possibility of implementing defined-contribution health insurance plans. Under a defined-contribution plan, employers or the government pay a specified portion of the premium, and the consumer chooses a plan from a menu of options, paying the balance of the premium based on their plan selection. A shift to a defined-contribution model will have far-reaching implications for consumers, employer and government purchasers, payers, and providers. Providers will face changes in consumption patterns and the need to develop a brand image, market their strengths directly to consumers, educate consumers about their services and pricing, and reconfigure infrastructures to be able to respond efficiently to consumer demands.