Many employers in the United States are investing in new programs to improve the quality of medical care and simultaneously shifting more of the health care costs to their employees without understanding the implications on the amount and type of care their employees will receive. These seemingly contradictory actions reflect an inability by employers to accurately assess how their health benefit decisions affect their profits. This paper proposes a practical method that employers can use to determine how much they should invest in the health of their workers, and to identify the best benefit designs to encourage appropriate health care delivery and use. This method could also be of value to employers in other countries who are considering ...