In a recent article by the Wall Street Journal (WSJ), Michael Kitces predicted benefits disappear. No leakage altogether, but rather morphing from a model of "defined benefit", where the employer takes the plan and the benefits to specific employees, to a model " defined contributions ", where employees are given an allowance and left to make their own decisions on health spending. Not surprisingly, the article provoked an important debate on the future benefits. 
In this article, we will highlight the predictions of Kitces and add our own comments on the change in benefits.
the transition from defined benefit to defined benefit healthcare contribution
Kitces discusses the transition from defined benefit to defined contribution benefits health. To understand the change, think of retirement benefits. Gone are the days when most companies offer pensions (a "defined benefit"). Now it is common to offer contributions to a 401 (k) (a "defined contribution")
Comment -. is a major change occurring in health benefits employers with a specific health plan (or plan) to give employees an allowance to care health and let them decide how to spend the funds. Kitces is not alone in his view. Many economists and industry leaders have issued forecasts this trend, as well.
For example, the economist Peter Orszag, former director of the Office of Management and Budget, wrote in 2011 that the move to contributions to health plans would be determined gradually take market relay health insurance over the next decade.
Bruce Brussard, CEO of Humana, said that "health insurance is going to go the way of pensions," it also compares the passage of health benefits plans to defined health defined contribution in passing pensions to 401 (k) s.
As the article explains, one of the drivers of the transition to defined contribution growth individual market health insurance.
growth of individual market Driving shift
As discussed Kitces, the affordable care Act ( " Obamacare ") made significant changes to individual health insurance, including the opening of insurance markets, making individual health insurance guaranteed-issue, and offering discounts for individual health insurance. These new benefits, and increased infrastructure are driving forces in the transition to defined contribution health benefits
Comment - We frequently. write on new benefits for individual health insurance and how it is sprouting growth of individual market. How the individual market is expected to grow? Different models and projections exist.
For example, according to a 2012 analysis by the Centers for Medicare & Medicaid Services (CMS), there were 14 million individual holders of health insurance policies in 2011. In 2014, CMS expects that number will grow to 20 million, and spend 31 million by 2020.
in the recent book by Zane Benefits, the end health insurance provided by the employer authors Paul Pilzer and Rick Lindquist predict the number of subscribers in the retail market will increase to over 150 million in 2025.
are benefits leakage employees? A Heated Debate
Change is hard. Employees are accustomed to receive health insurance coverage from their employer. It may feel like the benefits go far. But as Kitces discusses the change defined contribution can be positive, both financially and coverage-wise for employees. It is not removing advantages, it is simply change the payment model and selection.
As explained Kitces "In the end, there may be a lot of debate about whether this transition is good or bad. D ' First, it gives consumers greater freedom of choice. Moreover, it gives them additional responsibilities, they may not be well equipped to deal with. But anyway, the reality is that the trend in contributions defined develops and accelerates same pension to health insurance and more, it can be our future inevitable anyway "
Comment . - The benefits are not disappearing. They still play an important role in employee compensation. When the change will occur, and how the change will happen is yet to be seen. Nobody has a crystal ball, but what we see is that small businesses (especially small businesses that do not currently offer traditional health insurance) have already adopted this approach as a solution to providing benefits.
comments and responses readers in the article also lend perspective. Skepticism on the employer's level of coverage to the excitement of being able to choose their own health plan, the comments provide insight on where we are now with benefits, and perception this (inevitable?) change.
Conclusion
It is unlikely that the benefits disappear altogether. They are too important to employee compensation and retention. However, a change occurs from a traditional model defined benefit to a defined contribution model. The change is happening now in small businesses will spread to the majority of the market of the decade, if not decades, to come.
Or, is it?
What are your predictions for Kitces? Are the benefits disappear? a model defined contribution will really support benefits? Join the discussion below.
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