Corporate Health Care Purchasing and the Revised Social Contract with Workers

Abstract

The implicit social contract between large companies and their employees has been recently revised to emphasize workforce flexibility and the financial responsibility of individual employees for their own employment and benefits-related decisions. The most recent aspect of this social contract to be significantly changed is health care benefits. On the basis of in-depth case studies of health benefits purchasing at 15 large United States employers, the authors found that the reported use of a purchasing technique called managed competitionhas enabled firms to bring health benefits purchasing in line with other elements of the revised social contract. An important minority of companies in our study appear to have retained a different, “employer responsibility” approach toward employee health benefits, leading them to move more gradually to managed competition purchasing and refrain from instituting heavy premium cost sharing or cutting coverage for their employees. These findings are preliminary and deserve further study as to their generalizability and persistence.