Consumer-driven health insurance plans should account for 12 percent of the market by 2008.

That number could jump to 25 percent by 2010, according the Massachusetts-based Forrester Research. If that's the case, the market looks good for Charleston-based Vested Health.

"We're going to continue to grow rapidly," said Mike Baker, Vested's CEO. "We expect January of 2006 to be big. People will be re-enrolling. ... The marketplace is going through some massive changes right now. Employers are moving away from defined benefits to consumer-directed plans."

Baker and two partners, all of whom had previous experience in insurance, started Vested in 2001. It's first employer group joined the following year, and we've been going gangbusters ever since."

Today, it has 200 employer groups and 11,000 members in 15 states, although most clients are in West Virginia and Ohio. Baker said he expects the member total to grow to more than 30,000. Vested also partners with five other health insurance plans, providing them with the tools to offer consumer-directed options. Those plans include 1.2 million members. Baker won't discuss revenues but said, "We're doing well."

Five venture capital groups have invested in the company. One of the funds is the Ohio-based Technology Transfer Fund, which is attracted to Vested's payment transfer system, currently awaiting a patent.

After four years in business, Baker said, Vested's average rate increases are well below national rate increase averages.

According to the most recent National Health Care Trend Survey, U.S. employers expect to see between 12.1 percent and 14.2 percent increases in 2005. According to Vested Health, its overall rate increases will be 4.5 percent for employers with fewer than 50 employees and 7.8 percent for employers with more than 50 employees.

"Consumer-directed plans are going to help the employer," Baker said. "It's about getting employees engaged. It's about getting them to ask questions."

Vested Health's consumer-directed plan counters other methods of controlling heath care costs such as HMOs. In contrast to an insurance company deciding how money will be used, the consumer controls the account.

"You've got to move resources into the hands of consumers," Baker said. "You can't continue to have all the resources for health care goods and services tied up in the hands of insurance companies and government entities. That's just not going to work. We've got to put resources under the control of consumers. It's why more and more employer groups are seeing positive results."

The employer funds the accounts, and if the money isn't used, it rolls over each year and begins to add up. Instead of spending all allotted money on health care premiums, employers can divert, for example, $1,000 per employee each year to personal accounts. If the member's annual health care expenses exceed the amount in the vested account, an umbrella coverage policy provides further coverage.

"The idea is, as time goes on, more and more money is in the hands of consumers," Baker said. "Ultimately, that helps us with getting costs under control."

Depending on the plan, employees can roll over money after retirement to use in concert with Medicare. Portions of the money even could roll over after termination to be used before the next employer's plan takes effect.

"Otherwise, they go uninsured, which is ridiculous," Baker said.

According to Vested Health numbers, the rollover rate is 60.8 percent for employers with less than 50 employers and 63.9 percent for employers with more than 50 employees.

That means more than 60 percent of funds from the first year, on average, are available in the plan's second year. If $1000, then, is available to the employee each year, more than $600 would roll over to the following year, giving the employee more than $1,600 for year two.

"If a consumer-directed plan is done correctly, in the worst-case scenario, expenditures should be no different than under the previous plan," Baker said. "Employees should accumulate funds if they use it reasonably."

The Vested Health way is ultimately about personal responsibility. Baker said members should become engaged, examining the best health care options rather than accepting what the insurance company or health care provider initially offers. Insurance companies and other entities have their roles to play, Baker said, but so do consumers. When a person is involved with an insurance plan, they save money.

"We hear stories like that all the time," Baker said. "There's nobody to blame here, but members are often blinded by the whole thing. We're not doing what we're supposed to do as consumers. We want to have a positive impact on bringing costs under control."

The company, which employs 20, has offices in Chicago; Cincinnati; Columbus, Ohio; and Columbia, S.C., as well as a presence in Pittsburgh. But its headquarters remain in Charleston.

"I love it here," Baker said about Charleston. "It's a great town to do business in. I love the fact I can go to Yeager (Airport) at 6 a.m. and get a 6:25 (a.m.) flight. You're not going to get that in Chicago or Cincinnati. ... And it's centrally located. It makes good sense to have the headquarters located here."

And while "early pioneers" of consumer-directed health insurance -- such as Minnesota-based Definity Health and Virginia-based Lumenos -- are being purchased because of their rapid success, Vested Health plans to "stay independent and continue to grow," Baker said.

"Our focus right now is delivering the real solution. ... Clearly, that's going to take some time, but we have to get through to more people so more people can afford to get into the system."