Employees will soon play a bigger role in managing their own health care - and its cost - through what's being touted as the next big thing in health coverage.

It's not some new form of health maintenance organization, or HMO, the oldest and most restrictive form of managed care. Nor is it a different version of the preferred provider organization, or PPO - the ``managed care lite'' plan that has grown in popularity in recent years because of its flexibility.

This new plan is just entering the marketplace, but it is still so new that no one can agree what to call it. ``Defined contribution,'' ``health banks'' and ``self-directed care'' are some of the terms being tossed around.

But here's how it's supposed to work. Essentially, the plan allows an employer to put cash - say $1,000 - into a health care ``savings account.'' Employees can spend the money on their choice of a wide range of health needs, including doctor visits, prescription drugs, contact lens solutions, even alternative treatments such as acupuncture.

If the employee uses less than the allotted amount, those dollars roll over into next year's health bank. If the employee goes through the account - and that wouldn't take more than one significant incident - then more-traditional health coverage with a high-deductible catastrophic plan kicks in.

Although only a handful of employers are offering these plans, they are getting a closer look as the economy softens.

It's easy to see why. The plans allow employers to fix their costs and shift some of health care's rising costs to their employees.

``Cost has to become a factor through consumer choice. Until that happens, no way we as a society can get our arms around the health care issue,'' said Paul Markovich, marketing vice president for My Way Health, a small Concord company that hopes to offer its plan to employers next year.

``You're making the consumer accountable for the cost of their health care,'' Markovich said. ``You get the choice along with the financial accountability of the choices you make.''

The plans aren't entirely new. For years, industry experts have been talking about ``defined contribution.'' In its broadest sense, the term has meant giving employees a lump sum of money and sending them out into the market to buy whatever insurance they choose, along the same lines as a 401(k) plan. In essence, the employer gets out of the business of health care.

A less extreme form involves the employer kicking in a certain amount to various existing plans and requiring employees to pay the balance. Several models of this form have been around for years, but in April Blue Cross of California introduced what is considered the first defined contribution plan from a major health plan.

Along with My Way Health, a number of players are offering competing forms of these plans, including HealthMarket Inc., Definity Health Corp., Lumenos Inc. and Vivius Inc..

Thus far, employers have taken a cautious approach to the new plans. Ernie Lee, owner of Benefit Marketing Insurance Services in Lafayette, said his clients, mainly small employers, have not yet embraced any of the defined contribution options, but he said he believes it will start to take hold.

``The theory behind it is that if you start spending more of your own dollars, you become better consumers and more in touch with how much health care costs,'' Lee said. ``Everyone thinks an office visit costs the $20 co-pay, but you don't know the doctor is billing $55.''

Charles Rosson, a vice president in the San Francisco offices of Marsh Risk and Insurance Services, said many of his clients are looking at the option, but none are offering it.

``Much needs to happen before these things are widely adopted,'' said Rosson, whose clients are midsize employers. ``It represents a pretty major cultural shift. Employers have been providing health care coverage directly to their employees for, really, the last 50 years.''

Since most employers are already starting to finalize their plan options for 2002, Rosson said he does not think these new plans will be widely offered until 2003.

A Kaiser Family Foundation survey released in March found 7 percent of California employers said they are ``very likely'' to consider a defined contribution option, and 26 percent described themselves as ``somewhat likely,'' which is slightly higher than the 7 percent and 13 percent, respectively, reported nationwide.

``It's hardly a groundswell,'' said Larry Levitt, vice president of the Kaiser Family Foundation in Menlo Park, pointing out that the numbers show at least three-quarters of businesses are not even considering the option.

Employee backlash is one fear. In 1999, Xerox Corp. executives spoke publicly about possibly giving each employee $5,000 or $6,000 a year to buy their own health insurance, but they dropped the idea after they were were flooded with concerns from employees.

One of the companies out in front in the defined contribution issue is Medtronic Inc. The Minneapolis maker of pacemakers and other implantable medical devices with a factory in Santa Rosa, started offering Definity Health as an option to more than half of its 16,000 U.S. employees on Jan. 1.

Roger Chizek, Medtronic's director of U.S. benefits, said the company held various employee meetings and teleconferences to explain the new plan for about six weeks before open enrollment. He said the company was careful to offer it as an alternative, not a replacement, to all existing plans.

About 13 percent of the workers - slightly higher than the 10 percent projected - selected the plan.

``We wanted to offer a plan where the consumer had more control over what was going on,'' Chizek said. ``We believe that ultimately we will reduce costs, but that was not the driving force behind choosing the plan.''

Levitt, of the Kaiser Family Foundation, said it is hard to imagine employers would not be interested in saving money on these plans.

``Managed care isn't the answer we thought it was. Employers are looking for ways to save money, and the easiest way is to shift the cost to the employee,'' he said. ``Putting it in the guise of more choice and options makes it more palatable than saying we're going to take more money out of your paycheck.''

He said his primary concern is not for younger, healthier employees who, under most of the plan options, can pick the lowest-cost plan and ultimately wind up paying less than a traditional plan.

Rather, Levitt said, it is for ``sicker people, who are going to need a lot more of those services'' and who are going to have to pay more compared with the typical HMO or PPO plan.

In addition, he said, the traditional health plans may become even more expensive because healthier people - who help defray the costs of the sick - may opt for these newer, potentially less-expensive plans.

Some of the plans say they've addressed the fears of workers who may use more health services.

For example, Definity Health officials said they provide 100 percent coverage after the worker goes through the health account and deductible. They also said they completely cover preventive care such as mammogram screenings.

My Way Health's Markovich said the company makes additional deposits into employees' accounts for preventive care. He said the idea is not to discourage people from going to the doctor, but to make them think about it first.

``People don't go to the doctor as often and they don't order as many drugs when they have to pay out of their pocket,'' he said.

　　From Healthy.net