Healthcare

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E M P L O Y E E   B E N E F I T S ,   C O M P E N S A T I O N
                  A N D   P E N S I O N   L A W
                  Vol. 2, No. 7: April 12, 2001
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Publisher:     Legal Scholarship Network
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Editor:        PAMELA J. PERUN
               Urban Institute
               Mailto:pamela@planetnow.com

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Topic of This Issue: Healthcare
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T A B L E of C O N T E N T S
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WORKING PAPERS

"How Elastic is the Firm's Demand for Health Insurance?"
     JONATHAN GRUBER
        Massachusetts Institute of Technology (MIT)
        Department of Economics
        National Bureau of Economic Research (NBER)
     MICHAEL LETTAU
        U.S. Department of Labor, Bureau of Labor
        Statistics

"Medicaid"
     JONATHAN GRUBER
        Massachusetts Institute of Technology (MIT)
        Department of Economics
        National Bureau of Economic Research (NBER)

NEW and FORTHCOMING ARTICLES

"The Economic Costs of the Uninsured"
      EBRI Notes, Vol. 21, No. 8, August 2000
     STEVE BLAKELY
        Employee Benefit Research Institute (EBRI)

"Small Employers and Health Benefits: Findings from the 2000
Small Employer Health Benefits Survey"
      EBRI Issue Brief, No. 226, October 2000
     PAUL FRONSTIN
        Employee Benefit Research Institute (EBRI)

"Sources of Health Insurance and Characteristics of the
Uninsured: Analysis of the March 2000 Current Population Survey"
      EBRI Issue Brief No. 228, December 2000
     PAUL FRONSTIN
        Employee Benefit Research Institute (EBRI)

"Employer-Sponsored Health Insurance: Are Employers Good Agents
for Their Employees?"
      Milbank Quarterly, Vol. 78, No. 1, Pp. 5-21, March 2000
     PAMELA B. PEELE
        University of Pittsburgh
     JUDITH R. LAVE
        University of Pittsburgh
     JEANNE T. BLACK
        University of California at Los Angeles
     JOHN H. EVANS III
        University of Pittsburgh
        Katz School of Business

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Benefits, Compensation and Pension Law we do not referee working
papers. We accept abstracts of working papers in Employee
Benefits, Compensation and Pension Law whose topics suit the
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scholarly discourse.

W O R K I N G P A P E R Abstracts
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"How Elastic is the Firm's Demand for Health Insurance?"

      BY: JONATHAN GRUBER
              Massachusetts Institute of Technology (MIT)
              Department of Economics
              National Bureau of Economic Research (NBER)
           MICHAEL LETTAU
              U.S. Department of Labor, Bureau of Labor
              Statistics

Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=251274

Paper ID: NBER Working Paper No. W8021
Date: November 2000

Contact: JONATHAN GRUBER
   Email: Mailto:gruberj@mit.edu
Postal: Massachusetts Institute of Technology (MIT)
           Department of Economics
           Room E52-355
           50 Memorial Drive
           Cambridge, MA 02142 USA
   Phone: 617-253-8892
     Fax: 617-253-1330
Co-Auth: MICHAEL LETTAU
   Email: not available
Postal: U.S. Department of Labor, Bureau of Labor Statistics
           2 Massachusetts Avenue, NE
           Washington, DC 20212 USA

Paper Requests:
Full-Text downloads are available from SSRN Online for $5.

ABSTRACT:
We investigate the impact of tax subsidies on the firms decision
to offer insurance, and on conditional firm spending on
insurance. We do so using the micro-data underlying the Employee
Compensation Index, which has a major advantage for this
exercise: the matching of very high quality compensation data
with information on a sample of workers in the firm. We find
that, overall, there is a modest elasticity of insurance
offering with respect to after-tax prices (elasticity of -0.31
to -0.41), but a larger elasticity of insurance spending
(elasticity of 0.66 to 0.99). We also find that the elasticity
of offering is driven solely by small firms, for whom the
elasticity is much larger, but that spending is more elastic in
large firms. We provide some evidence on how the aggregation of
worker preferences determines benefits provision decisions. In
particular, we find evidence to support a median voter model of
benefits determination, along with some additional influence for
the most highly compensated workers in the firm. Our simulation
results suggest that major tax reform could lead to an enormous
reduction in employer-provided health insurance spending.

JEL Classification: H51, I18
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"Medicaid"

      BY: JONATHAN GRUBER
              Massachusetts Institute of Technology (MIT)
              Department of Economics
              National Bureau of Economic Research (NBER)

Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=238476

Paper ID: NBER Working Paper No. W7829
Date: August 2000

Paper Requests:
Full-Text downloads are available from SSRN Online for $5.

ABSTRACT:
This paper examines the history, rules, and economic
implications of the Medicaid program. I begin by providing a
detailed overview of how the program works. I then provide
information on who is covered, who is eligible, and spending
patterns. I then turn to a review of the economic issues
involved in studying the Medicaid program: assessing the impacts
on insurance coverage (public and private), health, labor
supply, family structure, and savings. I follow this with a
review of the empirical literature on each of these topics.
Finally, I conclude with a discussion of the policy issues and
unanswered questions surrounding the Medicaid program.

JEL Classification: I1, H5
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N E W and F O R T H C O M I N G Articles
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"The Economic Costs of the Uninsured"
EBRI Notes, Vol. 21, No. 8, August 2000

BY: STEVE BLAKELY
Employee Benefit Research Institute (EBRI)

Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=261878

Contact: STEVE BLAKELY
   Email: Mailto:blakely@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
           Suite 600
           2121 K Street, NW
           Washington, DC 20037-1896 USA
   Phone: 202-775-6341
     Fax: 202-775-6312

Paper Requests:
Contact Alicia Willis at Mailto:willis@ebri.org, or 2121 K St.,
NW, Suite 600, Washington, DC 20037-1896. Phone:(202)775-9132,
Fax:(202)775-6312.

ABSTRACT:
This article highlights the May 3, 2000, policy forum on "The
Economic Costs of the Uninsured," sponsored by Employee Benefit
Research Institute Education and Research Fund (EBRI-ERF).
Attended by about a hundred invited experts, the policy forum
examined the research that has been done connecting health
insurance status to the performance of the economy, and the
implications for consumers, business, and government.

Most Americans have health insurance protection, but for more
than a decade the proportion of nonelderly Americans without
health insurance has been steadily creeping up. Today, some 44
million people in the United States - 18.4 percent of those
under 65 - do not have insurance coverage to pay for their
health care.

But it is widely recognized that people without health
insurance still receive health care. The uninsured are not
staying out of the health care system; rather, they are
receiving higher-cost medical care (through emergency room
visits), and they are forcing others to pay for their health
care. Economists say these costs are picked up in various ways:
by businesses and their employees, in the form of higher
premiums for their insurance; by workers, in the form of taxes;
and by all Americans, in the form of an opportunity cost in lost
value to the U.S. economy.

Employers in both the private and public sectors are the
dominant source of health insurance for nonelderly individuals
in the United States, providing coverage for nearly two-thirds
of this under age 65 population in 1998. But increasingly, the
uninsured are being viewed as a challenge to and criticism of
the employment-based health care system in this country - not
just because the ranks of the uninsured are growing, but also
because roughly 85 percent of the 44 million uninsured Americans
are in a family with a working adult. As a result, many critics
see the employment-based health insurance system as a failure,
and are calling for it to be replaced with an individual-based
system.

However, even an individual-based system would not change the
reality that health insurance in the United States is voluntary.
Employers are not legally required to provide coverage to their
workers, and individuals are not legally required to maintain
coverage. In this kind of system, some segments of the working
population will have coverage, while others will not. In
addition, it is often overlooked that there are effectively two
employment-based health insurance systems - one for small
employers (where coverage rates are low) and one for large
employers (where coverage rates are high). Mandated solutions
are not as simple as they might seem, as indicated by experience
in the states concerning noncompliance with income tax, driver's
license registration, or automobile insurance.

Keywords: Employment-based benefits, Health insurance
coverage, Health care costs, Uninsured, Health care policy

The PDF for the above title, published in the August 2000
issue of EBRI Notes, also contains the fulltext of another
August 2000 EBRI Notes article abstracted on SSRN: "Recent
Evidence on Pension Coverage and Sponsorship, by Employer Size
and Industry."

JEL Classification: I1, J3
______________________________

"Small Employers and Health Benefits: Findings from the 2000
Small Employer Health Benefits Survey"
EBRI Issue Brief, No. 226, October 2000

BY: PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)

Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=257660

Contact: PAUL FRONSTIN
   Email: Mailto:fronstin@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
           Suite 600
           2121 K Street, NW
           Washington, DC 20037-1896 USA
   Phone: 202-775-6352
     Fax: 202-775-6312

Paper Requests:
Contact Alicia Willis at Mailto:willis@ebri.org, or 2121 K St.,
NW, Suite 600, Washington, DC 20037-1896. Phone:(202)775-9132,
Fax:(202)775-6312.

ABSTRACT:
This paper presents findings from the 2000 Small Employer Health
Benefits Survey. The survey examines a number of issues related
to small employers (between two and 50 workers) and their
decision whether to offer health benefits to workers. The goal
of the survey was to gather information to better understand
what would make more small employers offer health benefits.

Since the vast majority of large employers offer health
benefits, but many small employers do not, small businesses are
seen as perhaps the most crucial factor in efforts to reduce the
growing number of uninsured Americans. There are many reasons
why small employers do not offer health benefits. While small
employers report that cost is the primary reason they do not
offer health benefits, many other factors may also contribute to
their lower coverage rates. For example, small employers that do
not offer health benefits often are not aware of the value of
offering benefits, do not understand how the tax code provides
incentives to offer benefits, and do not understand how
insurance laws have addressed the accessibility and
affordability of health benefits. Specifically, findings from
the survey indicate that 57 percent of small employers did not
know that they can deduct 100 percent of their health insurance
premiums. Also, more than 60 percent did not know that insurers
may not deny health insurance coverage to small employers even
when the health status of their workers is poor.

Findings from the survey also indicate that many small
employers that do not offer health benefits are potential
purchasers. Twelve percent are either extremely or very likely
to start offering health benefits in the next two years, and 17
percent are somewhat likely to start offering health benefits. A
number of factors would increase the likelihood that a small
business would seriously consider offering a health benefits
plan. Two-thirds of small-business owners said they would
seriously consider offering health benefits if the government
provided assistance with premiums. Almost one-half would
consider doing so if insurance costs fell 10 percent. In
addition, one-half would be more likely to seriously consider
offering a health benefits plan if employees demand it.

The survey was conducted within the United States between May
16 and June 30, 2000, through 20-minute telephone interviews
with 506 companies with health benefits and 449 companies
without health benefits. The SEHBS was co-sponsored by the Blue
Cross and Blue Shield Association (BCBSA); the Employee Benefit
Research Institute (EBRI); and the Consumer Health Education
Council (CHEC). Mathew Greenwald & Associates, Inc., conducted
the survey.

The paper presents the survey's findings on various topics
concerning health benefits and small employers. These topics
include the tax treatment of health benefits, knowledge of
insurance regulations, the impact that offering health benefits
has on employers, the difference between employers that do and
do not offer health benefits, worker and family participation in
health benefits, the likelihood that employers will offer health
benefits in the future, and the impact of future costs and tax
incentives on employer behavior.

Keywords: Employee benefit surveys, Employment-based benefits,
Health insurance attitudes and opinions, Health insurance
coverage, Small business, Tax expenditures

JEL Classification: I1, J3
______________________________

"Sources of Health Insurance and Characteristics of the
Uninsured: Analysis of the March 2000 Current Population Survey"
EBRI Issue Brief No. 228, December 2000

BY: PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)

Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=255927

Paper Requests:
Contact Alicia Willis at Mailto:willis@ebri.org, or 2121 K St.,
NW, Suite 600, Washington, DC 20037-1896. Phone:(202)775-9132,
Fax:(202)775-6312.

ABSTRACT:
This Issue Brief provides summary data on those with and without
health insurance in the nation and in each state. It discusses
the characteristics most closely related to an individual's
health insurance status. Based on EBRI estimates from the March
2000 Current Population Survey (CPS), it represents 1999
data-the most recent available.

In 1999, for the first time since at least 1987, the
percentage of Americans with health insurance increased: 82.5
percent of nonelderly Americans (under age 65) were covered by
some form of health insurance, up from 81.6 percent in 1998. The
percentage of nonelderly Americans without health insurance
coverage declined from 18.4 percent in 1998 to 17.5 percent in
1999. The main reason for the decline in the number of uninsured
Americans is the strong economy and low unemployment. Between
1998 and 1999, the percentage of nonelderly Americans covered by
employment-based health insurance increased from 64.9 percent to
65.8 percent, continuing a longer-term trend that started
between 1993 and 1994.

The document has 11 tables and 12 charts.

Keywords: Employment-based benefits, Health insurance
coverage, Uninsured

JEL Classification: I1, J3
______________________________

"Employer-Sponsored Health Insurance: Are Employers Good Agents
for Their Employees?"
Milbank Quarterly, Vol. 78, No. 1, Pp. 5-21, March 2000

      BY: PAMELA B. PEELE
              University of Pittsburgh
           JUDITH R. LAVE
              University of Pittsburgh
           JEANNE T. BLACK
              University of California at Los Angeles
           JOHN H. EVANS III
              University of Pittsburgh
              Katz School of Business

Contact: PAMELA B. PEELE
   Email: Mailto:peele@pitt.edu
Postal: University of Pittsburgh
           Health Services Administration
           A649 Public Health
           Pittsburgh, PA 15261 USA
   Phone: 412 624-2743
Co-Auth: JUDITH R. LAVE
   Email: Mailto:lave@pitt.edu
Postal: University of Pittsburgh
           Health Services Administration
           A614 Public Health
           Pittsburgh, PA 15261 USA
Co-Auth: JEANNE T. BLACK
   Email: Mailto:jtblack@ucla.edu
Postal: University of California at Los Angeles
           Department of Health Services
           School of Public Health
           Box 951361
           Los Angeles, CA 90095 USA
Co-Auth: JOHN H. EVANS III
   Email: Mailto:jhe@katz.pitt.edu
Postal: University of Pittsburgh
           Katz School of Business
           Pittsburgh, PA 15260 USA

ABSTRACT:
Employers in the United States provide many welfare-type
benefits, such as life insurance, disability insurance, health
insurance, and pensions, to their employees. Employers can be
viewed as performing an agency role in purchasing pension,
health, and other welfare benefits for their employees. An
exploration of their competence in this role as agents for their
employees indicates that large employers are very helpful to
their employees in this arena. They seem to contribute to
individual employees' welfare by providing them with valued
services in purchasing health insurance.