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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
& P E N S I O N L A W
Vol. 4, No. 24: December 18, 2003
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Publisher: LSN Employment, Labor, Compensation & Pension Journals
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Editor: PAMELA PERUN
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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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NEW and FORTHCOMING ARTICLES
"Contracting with Limited Commitment: Evidence from
Employment-Based Health Insurance Contracts"
RAND Journal of Economics, Vol. 34, No. 4, Winter 2003
KEITH J. CROCKER
Penn State University - Smeal College of Business
JOHN MORAN
Syracuse University
Department of Economics
"Uninsured Rose in 2002 as Number of Americans With
Employment-Based Health Benefits Declined"
EBRI Notes, Vol. 24, No. 11, November 2003
PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
"The Impact of State Managed Care Liability Statutes"
Health Affairs, Vol. 22, No. 5, September/October 2003
MARK A. HALL
Wake Forest University School of Law
GAIL B. AGRAWAL
University of North Carolina at Chapel Hill
School of Law
"What if You Could Sue Your HMO? Managed Care Liability Beyond
the ERISA Shield"
St. Louis University Law Journal, Vol. 47, No. 2, Spring
2003
GAIL B. AGRAWAL
University of North Carolina at Chapel Hill
School of Law
MARK A. HALL
Wake Forest University School of Law
WORKING PAPERS
"Informal Information Sharing and the Demand for Health Insurance
Among the Elderly"
JOHN MORAN
Syracuse University
Department of Economics
JEFFREY D. KUBIK
Syracuse University
Department of Economics
ELDAR BEISEITOV
Syracuse University - Economics
"Health Plan Conversions: Are They in the Public Interest?"
NANCY D. BEAULIEU
Harvard University
Negotiations, Organizations and Markets Unit
National Bureau of Economic Research (NBER)
"Health Insurance Coverage and the Macroeconomy"
JOHN CAWLEY
Cornell University - Department of Policy Analysis
& Management (PAM)
National Bureau of Economic Research (NBER)
KOSALI ILAYPERUMA SIMON
Cornell University - Department of Policy Analysis
& Management (PAM)
National Bureau of Economic Research (NBER)
"The Role of Retiree Health Insurance in the Employment Behavior
of Older Men"
DAVID M. BLAU
University of North Carolina at Chapel Hill
Department of Economics
DONNA B. GILLESKIE
University of North Carolina at Chapel Hill
Department of Economics
National Bureau of Economic Research (NBER)
S S R N I N F O R M A T I O N
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Benefits, Compensation & Pension Law we do not referee working
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N E W and F O R T H C O M I N G Articles
_________________________________________________________________
"Contracting with Limited Commitment: Evidence from
Employment-Based Health Insurance Contracts"
RAND Journal of Economics, Vol. 34, No. 4, Winter 2003
BY: KEITH J. CROCKER
Penn State University - Smeal College of Business
JOHN MORAN
Syracuse University
Department of Economics
Contact: KEITH J. CROCKER
Email: Mailto:kcrocker@psu.edu
Postal: Penn State University - Smeal College of Business
University Park, PA 16802 UNITED STATES
Phone: 814-863-0664
Fax: 814-863-0664
Co-Auth: JOHN MORAN
Email: Mailto:jmoran@maxwell.syr.edu
Postal: Syracuse University
Department of Economics
426 Eggers Hall
Syracuse, NY 13244-1020 UNITED STATES
ABSTRACT:
Impediments to worker mobility serve to mitigate the attrition
of healthy individuals from employer-sponsored insurance pools,
thereby creating a de facto commitment mechanism that allows for
more complete insurance of health risks than would be possible
in the absence of such frictions. Using data on health insurance
contracts obtained from the 1987 National Medical Expenditure
Survey, we find that the quantity of insurance provided is
positively related to the degree of worker commitment. These
results illustrate the importance of commitment in the design of
long-term contracts, and provide an additional rationale for the
bundling of health insurance with employment.
______________________________
"Uninsured Rose in 2002 as Number of Americans With
Employment-Based Health Benefits Declined"
EBRI Notes, Vol. 24, No. 11, November 2003
BY: PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=476563
Other Electronic Document Delivery:
http://www.ebri.org
SSRN only offers technical support for papers
downloaded from the SSRN Electronic Paper Collection
location. When URLs wrap, you must copy and paste
them into your browser eliminating all spaces.
Contact: PAUL FRONSTIN
Email: Mailto:fronstin@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Phone: 202-775-6352
Fax: 202-775-6312
Paper Requests:
Contact Alicia Willis at Mailto:publications@ebri.org, or 2121 K
St., NW, Suite 600, Washington, DC 20037-1896.
Phone:(202)572-7422, Fax:(202)775-6312. Full-Text downloads are
available from SSRN Online for $7.50.
ABSTRACT:
This article provides a look at the effect of a weak economy,
combined with rising health benefit costs, on the number of
Americans who have employment-based health benefits, who are
covered by public programs, and who are uninsured. Among all
Americans, 61.3 percent - or 175.3 million - were covered by
employment-based health benefits during 2002, down from 63.6
percent in 2000. Initial findings indicate that this decline was
due to erosion of coverage among both workers and nonworkers as
small employers either dropped health benefits or required
workers to pay more for them when they were offered.
The PDF for the above title, published in the November 2003
issue of EBRI Notes, also contains the fulltext of another
November 2003 EBRI Notes article abstracted on SSRN: Income of
the Elderly Population: 2002.
JEL Classification: I11, J1, J33
______________________________
"The Impact of State Managed Care Liability Statutes"
Health Affairs, Vol. 22, No. 5, September/October 2003
BY: MARK A. HALL
Wake Forest University School of Law
GAIL B. AGRAWAL
University of North Carolina at Chapel Hill
School of Law
Paper ID: Wake Forest Univ. Public Law Research Paper No. 03-16;
UNC Public Law Research Paper No. 03-1
Contact: MARK A. HALL
Email: Mailto:mhall@law.wfu.edu
Postal: Wake Forest University School of Law
Medical Center Boulevard
Winston-Salem, NC 27157-1063 UNITED STATES
Phone: 336-716-9807
Co-Auth: GAIL B. AGRAWAL
Email: Mailto:gagrawal@email.unc.edu
Postal: University of North Carolina at Chapel Hill
School of Law
Van Hecke-Wettach Hall, 100 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380 UNITED STATES
ABSTRACT:
Since the mid-1990s, ten states have enacted statutes that
create tort liability for patient harm caused by managed care
organizations, and similar liability has been considered in
Congress. This extensive qualitative study is the first attempt
to evaluate the impact of these state statutes on liability
exposure and litigation activity. These statutes have resulted
in little or no litigation and are not seen as creating any
fundamentally new type of liability exposure. This muted effect
is not due primarily to ERISA pre-emption, which lawyers believe
is rapidly eroding but is still a barrier. Instead, plaintiffs
lawyers explained that the costs and complexities of suing a
health plan deter them from including this additional defendant
in medical malpractice cases. Health plans and their lawyers
explained that the main drivers of increased liability concerns
are the large class action lawsuits that are pending under
federal law and the few state cases with massive punitive damage
verdicts prior to these statutes. This suggests that a federal
liability statute is not likely to greatly increase liability
exposure unless it allows such suits.
______________________________
"What if You Could Sue Your HMO? Managed Care Liability Beyond
the ERISA Shield"
St. Louis University Law Journal, Vol. 47, No. 2, Spring
2003
BY: GAIL B. AGRAWAL
University of North Carolina at Chapel Hill
School of Law
MARK A. HALL
Wake Forest University School of Law
Paper ID: Wake Forest Univ. Public Law Research Paper No. 03-17;
UNC Public Law Research Paper No. 03-2
Contact: MARK A. HALL
Email: Mailto:mhall@law.wfu.edu
Postal: Wake Forest University School of Law
Medical Center Boulevard
Winston-Salem, NC 27157-1063 UNITED STATES
Phone: 336-716-9807
Co-Auth: GAIL B. AGRAWAL
Email: Mailto:gagrawal@email.unc.edu
Postal: University of North Carolina at Chapel Hill
School of Law
Van Hecke-Wettach Hall, 100 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380 UNITED STATES
ABSTRACT:
The legal environment that afforded managed care organizations
protection from liability for harm resulting from their cost
containment activities has shifted and the risk of liability
under state law has increased. This article combines
conventional legal analysis with empirical findings from a large
number of confidential interviews with experienced health care
lawyers, health plan managers, and industry observers to explain
why managed care liability has been low and why it is
increasing. It also analyzes liability statutes enacted by the
states and proposed by Congress to describe their differing
scopes and standards of liability. The article then addresses
the costs and benefits of enhanced liability of managed care
organizations to develop a framework for the adjudication of
lawsuits challenging the clinically based actions taken by
managed care organizations. The authors conclude that a medical
professional standard should govern vicarious liability claims
that seek to hold health insurers responsible for the quality of
care rendered by their physician agents and that a process
standard should govern claims that challenge managed care
organizations' clinically based coverage determinations. In
cases seeking personal injury damages for wrongful coverage
determinations, the principal focus should be whether the
managed care organization had an acceptable system in place, and
followed it, for making reasonable assessments of clinical
factors that determine what the insurance policy covers.
Keywords: managed care, medical malpractice, cost containment,
liability, ERISA preemption
______________________________
W O R K I N G P A P E R Abstracts
_________________________________________________________________
"Informal Information Sharing and the Demand for Health Insurance
Among the Elderly"
BY: JOHN MORAN
Syracuse University
Department of Economics
JEFFREY D. KUBIK
Syracuse University
Department of Economics
ELDAR BEISEITOV
Syracuse University - Economics
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=465341
Date: November 3, 2003
Contact: JOHN MORAN
Email: Mailto:jmoran@maxwell.syr.edu
Postal: Syracuse University
Department of Economics
426 Eggers Hall
Syracuse, NY 13244-1020 UNITED STATES
Phone: 315-443-9058
Fax: 315-443-1081
Co-Auth: JEFFREY D. KUBIK
Email: Mailto:JDKUBIK@MAXWELL.SYR.EDU
Postal: Syracuse University
Department of Economics
426 Eggers Hall
Syracuse, NY 13244-1020 UNITED STATES
Co-Auth: ELDAR BEISEITOV
Email: Mailto:ebeiseit@maxwell.syr.edu
Postal: Syracuse University - Economics
900 S. Crouse Avenue
Syracuse, NY 13244-2130 UNITED STATES
ABSTRACT:
Using data from the 1998 Wave of the Health and Retirement
Study, we document the role of informal information sharing,
also known as social learning, on the health insurance decisions
of the elderly. We find that more information sharing, as
proxied by contacts with friends and neighbors, reduces the
likelihood of enrolling in a Medicare managed care plan relative
to purchasing a medigap policy or having coverage through
Medicare alone. Our results suggest that informal informational
networks are an important determinant of the health insurance
choices of the elderly and that "word-of-mouth" information
sharing may have played a role in the preference of some seniors
for fee-for-service insurance over managed care. Our findings
are also consistent with the view that formal sources of
information may have been less effective than originally hoped
because they fail to capture the kind of "soft" information
exchanged in informal settings or because people are more likely
to believe reports from friends and neighbors. However, if
formal information were to become more widely accepted, our
results suggest that multiplier effects created by social
networks could potentially allow quality ratings to be
distributed in a more cost-effective manner through geographic
targeting.
Keywords: Medicare Managed Care, Medicare HMOs, Medigap,
Social Learning, Social Interactions
JEL Classification: D83, G22, H51, I10, I18
______________________________
"Health Plan Conversions: Are They in the Public Interest?"
BY: NANCY D. BEAULIEU
Harvard University
Negotiations, Organizations and Markets Unit
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=476084
Paper ID: NBER Working Paper No. W10127
Date: December 2003
Contact: NANCY D. BEAULIEU
Email: Mailto:NBEAULIEU@HBS.EDU
Postal: Harvard University
Negotiations, Organizations and Markets Unit
Soldiers Field
Boston, MA 02163 UNITED STATES
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
Recently, not-for-profit health plans have been converting to
for-profit status and these conversions have frequently occurred
as steps to facilitate merger or acquisition with a for-profit
company. Some industry observers attribute these managed care
market place trends to an industry shake out resulting from
increased competition in the sector. At the same time, the
perceived competitive pressures have led to questions about the
long run viability of non-profit health plans. Furthermore, some
industry and government leaders believe that some non-profits
are already conducting themselves like for-profit health plans
and question the state premium tax exemption ordinarily accorded
to such plans. This paper develops a framework for evaluating
health plan conversions and examines related health policy
issues through the lens of a case study of the proposed
conversion of the CareFirst Blue Cross Blue Shield Company.
Analyses demonstrate that CareFirst wields substantial market
power in some segments of its local market, that it is unlikely
to realize cost savings through expanded economies of scale, and
that quality of care appears to be lower in the plans typically
acquiring converting health plans.
JEL Classification: I1, L3
______________________________
"Health Insurance Coverage and the Macroeconomy"
BY: JOHN CAWLEY
Cornell University - Department of Policy Analysis
& Management (PAM)
National Bureau of Economic Research (NBER)
KOSALI ILAYPERUMA SIMON
Cornell University - Department of Policy Analysis
& Management (PAM)
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=467560
Paper ID: NBER Working Paper No. W10092
Date: November 2003
Contact: JOHN CAWLEY
Email: Mailto:jhc38@cornell.edu
Postal: Cornell University - Department of Policy Analysis &
Management (PAM)
N132 Martha Van Rensselaer Hall
Ithaca, NY 14853 UNITED STATES
Co-Auth: KOSALI ILAYPERUMA SIMON
Email: Mailto:kis6@cornell.edu
Postal: Cornell University - Department of Policy Analysis &
Management (PAM)
106 MVR Hall
Ithaca, NY UNITED STATES
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
The primary objective of this paper is to improve our
understanding of the historic relationship between state and
national macroeconomic climate and the health insurance coverage
of Americans. The secondary objective of this paper is to use
the historic findings to estimate how the number of uninsured
Americans changed during the 2001 recession, and to estimate
whether to date enough people have gained health insurance
during the current recovery to offset the losses during the
recession. We conclude that the macroeconomy (measured by state
unemployment rate and real gross state product) is correlated
with the probability of men's health insurance coverage and that
this correlation is only partly explained by changes in men's
employment status. Counter-cyclical health insurance programs
such as Medicaid and the State Children's Health Insurance
Program seem to ensure that the health insurance coverage of
women and children is insulated from macroeconomic changes. We
estimate that 851,000 Americans, the vast majority of whom were
adult men, lost health insurance due to macroeconomic conditions
alone during the 2001 recession.
JEL Classification: I10, J3, J6, E32
______________________________
"The Role of Retiree Health Insurance in the Employment Behavior
of Older Men"
BY: DAVID M. BLAU
University of North Carolina at Chapel Hill
Department of Economics
DONNA B. GILLESKIE
University of North Carolina at Chapel Hill
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=468787
Paper ID: NBER Working Paper No. W10100
Date: November 2003
Contact: DONNA B. GILLESKIE
Email: Mailto:donna_gilleskie@unc.edu
Postal: University of North Carolina at Chapel Hill
Department of Economics
Chapel Hill, NC 27599 UNITED STATES
Co-Auth: DAVID M. BLAU
Email: Mailto:david_blau@unc.edu
Postal: University of North Carolina at Chapel Hill
Department of Economics
Gardner Hall
Chapel Hill, NC 27599 UNITED STATES
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
We model the employment and medical care decisions of older men
who face health risk. The budget constraint incorporates
detailed characteristics of health insurance as well as Social
Security and private pensions. A man whose health insurance is
tied to continued employment with his current employer faces the
risk of large medical expenditures in the event of an adverse
health shock if he retires before becoming eligible for Medicare
at age 65. A man whose employer provides retiree health
insurance or who has access to other health insurance not tied
to his employment decision (e.g., from his wife) can retire
before age 65 without consequences for his health insurance
coverage. We use data from the Health and Retirement Survey to
estimate the parameters of the model using structural methods.
Simulations based on the estimates imply that changes in health
insurance, including access and restrictions to retiree health
insurance and Medicare have a modest impact on employment
behavior among older males.