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Management article
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Reference no. R0207B
Published by: Harvard Business Publishing
Published in: "Harvard Business Review", 2004

Abstract

Businesses spend billions on health insurance. And what do they get for their money? A lot of unhappy employees. Workers fret about the quality of the care they receive, the burden of their out-of-pocket expenses, and the gaps in their coverage. For businesses, health care has become a lose-lose proposition: They pay way too much, and they get way too little. The problem is that the health care industry has been shielded from consumer pressure - by employers, insurers, and the government. As a result, costs have exploded even as choices have narrowed. But if companies embrace a new model of health coverage - one that places control over both costs and care directly into the hands of employees - the competitive forces that spur productivity and innovation in consumer markets can be loosed upon the inefficient, tradition-bound health care system. Moving to consumer-driven health care requires that companies revamp their health benefits in six ways: (1) give employees incentives to shop intelligently; (2) offer a real choice of insurance plans; (3) charge employees prices that accurately reflect the company''s costs; (4) let providers set their own prices; (5) adjust payments for each enrollee based on need; and (6) provide relevant information. May be used with: (9-302-006) ''Consumer-Driven Health Care: Medtronic''s Health Insurance Options''.

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Abstract

Businesses spend billions on health insurance. And what do they get for their money? A lot of unhappy employees. Workers fret about the quality of the care they receive, the burden of their out-of-pocket expenses, and the gaps in their coverage. For businesses, health care has become a lose-lose proposition: They pay way too much, and they get way too little. The problem is that the health care industry has been shielded from consumer pressure - by employers, insurers, and the government. As a result, costs have exploded even as choices have narrowed. But if companies embrace a new model of health coverage - one that places control over both costs and care directly into the hands of employees - the competitive forces that spur productivity and innovation in consumer markets can be loosed upon the inefficient, tradition-bound health care system. Moving to consumer-driven health care requires that companies revamp their health benefits in six ways: (1) give employees incentives to shop intelligently; (2) offer a real choice of insurance plans; (3) charge employees prices that accurately reflect the company''s costs; (4) let providers set their own prices; (5) adjust payments for each enrollee based on need; and (6) provide relevant information. May be used with: (9-302-006) ''Consumer-Driven Health Care: Medtronic''s Health Insurance Options''.

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