Employees who opted for coverage via Choice Plus picked one of several networks of clinics and hospitals that would provide their care. The competing networks were assigned to one of three tiers based on cost, with workers paying lower premiums if they opted for a clinic system that provided better quality at a lower cost.
The program came from an employer coalition that the Wall Street Journal in 1998 called "one of the most innovative campaigns in the nation's war on health care costs."
For a time, it was successful, said Jon Christianson, a health researcher at the University of Minnesota who published studies on the program. Employees paid attention to the information they received about choosing among care networks. There was some evidence of cost restraint, without a negative impact on quality.
But there were a number of hitches that prevented Choice Plus from achieving a critical mass of enrollees. In the end, employers started dropping out in order to take advantage of lower prices offered by health insurers.
"I think it's very hard for employers to commit to a long-run health care strategy aimed at changing the health care system, when the CFO is monitoring health benefit costs on a quarterly basis and saying: 'You need to do something to reduce these costs next quarter,'?" Christianson said. "So, if somebody comes in and gives you a really strong offer, it's hard to reject that."
Insurers maintain the program didn't survive for reasons other than competition from carriers.
Many workers never opted for Choice Plus because the structure was complex, said Marcus Merz, the retired chief executive of the health insurer PreferredOne.
Employers bristled at putting financial barriers in front of workers whose doctors fell in the high-cost tier. And employers with workers in many states didn't like the idea of having different benefits in different regions, Merz said.
"There was a lot of rhetoric at the time about eliminating the middle man," he said. "But the whole idea of directing volume never took off. The basic reasons are: The employers didn't support it; the health care providers didn't have the infrastructure; and low-cost providers didn't get the benefits."
While employers and insurers stress different points in the history of Choice Plus, some said it still offers lessons for Amazon, Berkshire Hathaway and JPMorgan.