Steve Case is launching a new business called Revolution Health that seeks to capitalize on the trend toward consumer-driven health care and the defined-contribution health care plan. The company has acquired ExtendBenefits, a pioneer in providing defined-contribution health benefits for employers.

Finding a way to control spiraling health care costs will be pivotal for business survival in the near future. In a defined-contribution model for health care, companies designate a specific amount of money for the health care expenses of an employee during the year. Workers then use tax free dollars to pay for out of pocket expenses. The idea is that when employees are responsible for higher out-of-pocket minimums, any unnecessary health care expenditures are eliminated, saving money for the company and its employees.

So far, 50 companies have signed on with ExtendBenefits. Most, however, are using it for backup or supplementary coverage rather than as a replacement for their main plans.

Large companies may be reluctant to get into this type of coverage because of the potential liabilities involved. In traditional group-sponsored plans, everyone is guaranteed acceptance. In the individual benefits plan, applicants with high risk profiles are generally turned down. Also, certain workers would find the plans difficult to afford because the price varies with the age and health of the applicant. All of these issues could raise the subject of inequity in the workplace. Another potential problem with the program could be the broad array of choice in coverage that is available, making it difficult for employees to choose the plan that is best suited for them. For example, some plans don't cover maternity costs, so if a worker were to get pregnant while she was under this plan, her care would not be covered. Finally, the new direction in health care represents a break from tradition for large companies who have traditionally been more paternal in caring for the needs of their employees.

In spite of the potential problems, Case and his board of directors believe that corporate America is on the verge of a dramatic change in the current health care model. Just as the way retirement benefits have changed, Case and his supporters believe health care benefits will change as well. To be successful, ExtendBenefits must educate their clients about the potential benefits. Estimates show that companies could save as much as 20 to 50% of existing costs by successfully implementing their program. However, with about 90% of the current 178 million people insured in America currently covered under group plans from employers, the company faces a difficult battle.