Health benefits historically have been the welfare benefit most employees ask for and most employers provide. Until about 40 years ago, group health plans also were relatively simple to adopt, maintain and administer. The primary type of health benefit plan offered by employers was a simple “fee for service” or indemnity plan, usually consisting of coverage under a group insurance policy, in which the plan simply reimbursed the employee, within certain limits, for covered health services the employee and his or her covered dependents received. “Designing” such a plan required little effort. In many markets, employers quite often had very few insured arrangements to choose from and the alternatives may have differed from each other only slightly.
However, in the past 40+ years, rapidly escalating healthcare costs and increasing government regulations have introduced numerous, substantial and far-reaching complications to the design, operation and financing of health insurance arrangements, to the point that the administration of some group health plans can rival or even exceed the administration of pension and profit-sharing plans in complexity. Moreover, as insurers and others have tried to develop products to meet the changing market, employers are faced with a much greater assortment of health insurance arrangements to select from. In...
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