Two large American companies recently announced that they are planning abandon the traditional “defined benefit” model of providing health insurance benefits to their employees and switch to a “defined contribution” model, in which they will offer employees a fixed annual sum — like a voucher — that the workers can use to subsidize insurance they will have to buy for themselves. The companies and other proponents of the defined contribution model tout the shift as “empowering” employees with greater “choice.” The result of Remapping Debate’s inquiries, however, make clear that the central motivation for the switch is to shift the risk of rising health insurance costs from employers to employees, thereby undermining a multi-generational compact between management and labor.
More