What future may hold

Firms May Give Up Health Care

More employers may relinquish long-standing role as chief health care buyer for their workers.

LOS ANGELES — The Supreme Court’s endorsement of the federal health care law last week could spur more employers across the nation to relinquish their long-standing role as chief health care buyer for their workers.

This shift has already begun among some big employers shedding their role in providing retiree health benefits, and experts say the court’s decision could eventually lead companies to pursue a similar approach with current workers.

With the Affordable Care Act still on track to offer numerous new benefits, such as guaranteed coverage for all adults starting in 2014, some companies may want to stop providing health coverage and instead give workers money to buy their own. One of the more popular ideas being discussed is to give workers a lump sum, or defined contribution, and then let them use that money to buy their own individual health plan.

The approach resembles existing 401(k) retirement plans in which employers put a fixed amount of tax-deferred dollars into employees’ retirement accounts and leave it to the workers to manage the money. In the case of health benefits, employers gain more control over their spending and avoid the hassle of picking plans for their workforce.

The idea comes at a time when employers are eager for new options as medical costs and insurance premiums keep climbing. The average family premium for employer coverage in the U.S. has increased 113 percent in the past decade, according to the Kaiser Family Foundation.

Big companies are unlikely to give up their conventional health care role in the near term. And even smaller firms, especially in technology, may want to keep benefits in-house to compete for the best talent. But experts say companies in retail, hospitality and other service sectors with lots of lower-wage workers may find this alternative appealing.

“Some companies wi l l look for new approaches like defined contributions, vouchers and exchanges,” said David Lansky, chief executive of the Pacific Business Group on Health. “Maybe that all gets a boost now.”

One upside is that workers could shop for plans that best suit their needs in terms of doctors and benefits, rather than relying on what their employers pick. They also get to take their policies with them if they leave their jobs. But a downside is they could be exposed to rising premiums in the private market beyond the fixed subsidy from their employer.

“Just because you have guaranteed coverage doesn’t mean it will be affordable,” said Sima Reid, an insurance broker in Lakewood, Calif.