_________________________________________________________________
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. 6, No. 22: November 22, 2005
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Publisher: Employment, Labor, Compensation & Pension Law Journals
a division of
Social Science Electronic Publishing, Inc. (SSEP)
and Social Science Research Network (SSRN)
Editor: PAMELA PERUN
Urban Institute
Mailto:pamela@planetnow.com
Copyright: SSEP, Inc. 2005. All rights reserved.
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Topic of This Issue:
Health Policy
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T A B L E of C O N T E N T S
_________________________________________________________________
NEW and FORTHCOMING ARTICLES
"Who's Afraid of Personal Responsibility? Health Savings Accounts
and the Future of American Health Care"
McGeorge Law Review, Vol. 36, p. 535, 2005
RICHARD L. KAPLAN
University of Illinois College of Law
"IRS Provides Grace Period for Taxpayers Using FSAs"
Tax Notes, Vol. 108, No. 14, September 26, 2005
DIANE A. RIORDAN
James Madison University
College of Business
MICHAEL RIORDAN
James Madison University
College of Business
MOLLY G. BROWN
James Madison University
College of Business
"Comparative Perspectives and Policy Learning in the World of
Health Care"
Journal of Comparative Policy Analysis, 2005
THEODORE RICHARD MARMOR
Yale University
School of Management
RICHARD B. FREEMAN
University of Edinburgh - School of Social and
Political Studies
National Bureau of Economic Research (NBER)
University of London
Centre for Economic Performance (CEP)
Harvard University
KIEKE OKMA
Independent
WORKING PAPERS
"Health Insurance and Tax Policy"
KARSTEN JESKE
Federal Reserve Bank of Atlanta
SAGIRI KITAO
New York University
Department of Economics
"Offers or Take-up: Explaining Minorities' Lower Health Insurance
Coverage"
MARJORIE HONIG
Hunter College, City University of New York -
Department of Economics
IRENA DUSHI
Hunter College
"Workers' Compensation: Benefits, Coverage, and Costs, 2003"
ISHITA SENGUPTA
National Academy of Social Insurance (NASI)
VIRGINIA P. RENO
National Academy of Social Insurance (NASI)
JOHN F. BURTON
School of Management and Labor Relations
"Insurance and Innovation in Health Care Markets"
DARIUS LAKDAWALLA
The RAND Corporation
National Bureau of Economic Research (NBER)
NEERAJ SOOD
RAND
S S R N I N F O R M A T I O N
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N E W and F O R T H C O M I N G Articles
_________________________________________________________________
"Who's Afraid of Personal Responsibility? Health Savings Accounts
and the Future of American Health Care"
McGeorge Law Review, Vol. 36, p. 535, 2005
BY: RICHARD L. KAPLAN
University of Illinois College of Law
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=805825
Paper ID: Illinois Public Law Research Paper No. 05-12; U
Illinois Law & Economics Research Paper No. LE05-025
Contact: RICHARD L. KAPLAN
Email: Mailto:RKAPLAN@LAW.UIUC.EDU
Postal: University of Illinois College of Law
504 E. Pennsylvania Avenue
Champaign, IL 61820 UNITED STATES
Phone: (217) 333-2499
Fax: (217) 244-1478
ABSTRACT:
This article examines the recent enactment of Health Savings
Accounts (HSA) as they might affect how Americans obtain
coverage for their health care expenses and the role that
personal responsibility will play in that process. It explains
the historical development of this country's tying health
insurance to current employment status and especially the role
of tax policy in that phenomenon. After considering the
advantages and disadvantages of this approach, the article
analyzes the key elements of the 2003 legislation that created
HSAs. This part examines the "high deductible" insurance plan
that must accompany an HSA, including its limit on out-of-pocket
expenditures and the scope of additional insurance permitted.
The operation of the HSA itself is then addressed, including the
relationship of employer and employee contributions into such
accounts, the tax treatment of distributions from these
accounts, and what happens to unused balances. The article then
assesses the likely impact of HSAs according to five C's:
complexity of possible configurations, confusion over
self-administration, choice of alternative arrangements,
control, and cost of health care. The article concludes that
HSAs represent a potentially paradigmatic shift in how Americans
view health care costs and align a growing appetite for
individual control over this critical employee benefit with
today's workplace realities.
______________________________
"IRS Provides Grace Period for Taxpayers Using FSAs"
Tax Notes, Vol. 108, No. 14, September 26, 2005
BY: DIANE A. RIORDAN
James Madison University
College of Business
MICHAEL RIORDAN
James Madison University
College of Business
MOLLY G. BROWN
James Madison University
College of Business
Contact: DIANE A. RIORDAN
Email: Mailto:riordada@jmu.edu
Postal: James Madison University
College of Business
Harrisonburg, VA 22807 UNITED STATES
Co-Auth: MICHAEL RIORDAN
Email: Mailto:riordamp@jmu.edu
Postal: James Madison University
College of Business
Harrisonburg, VA 22807 UNITED STATES
Co-Auth: MOLLY G. BROWN
Email: Mailto:brownmg@jmu.edu
Postal: James Madison University
College of Business
Harrisonburg, VA 22807 UNITED STATES
ABSTRACT:
In a practice article, Profs. Diane A. Riordan and Michael P.
Riordan, and Molly G. Brown, discuss recent IRS guidance on
flexible spending arrangements.
______________________________
"Comparative Perspectives and Policy Learning in the World of
Health Care"
Journal of Comparative Policy Analysis, 2005
BY: THEODORE RICHARD MARMOR
Yale University
School of Management
RICHARD B. FREEMAN
University of Edinburgh - School of Social and
Political Studies
National Bureau of Economic Research (NBER)
University of London
Centre for Economic Performance (CEP)
Harvard University
KIEKE OKMA
Independent
Contact: THEODORE RICHARD MARMOR
Email: Mailto:theodore.marmor@yale.edu
Postal: Yale University
School of Management
135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200 UNITED STATES
Phone: 203-432-3238
Co-Auth: RICHARD B. FREEMAN
Email: Mailto:freeman@nber.org
Postal: University of Edinburgh - School of Social and Political
Studies
Edinburgh EH8 9LL, UNITED KINGDOM
Co-Auth: KIEKE OKMA
Email: Mailto:kieke.okma@gmail.com
Postal: Independent
No Address Available,
ABSTRACT:
The main point of this article is to explore the methodological
questions raised by weaknesses in international comparative work
in the field of health policy. The core question is how
competent learning from one nation to another can take place.
The article argues that there is a considerable gap between the
promise and the actual performance of comparative policy
studies. Misdescription and superficiality are all too common.
unwarranted inferences, rhetorical distortion, and caricatures -
all show up too regularly in comparative health policy
scholarship and debates.
The article first describes the context of the health and
welfare state reform debates during the past three decades. In
almost all industrialized democracies, rising medical
expenditures exacerbated fiscal concerns about the affordability
of the mature welfare states. In reaction to pressure for policy
change in health care, policy makers looked abroad for promising
solutions of domestic problems. The following section takes up
the topic of cross-national policy leaning. Then, it critically
reviews recent debates about health care reforms and addresses
the purposes, promises and pitfalls of comparative study in
health policy. The next section categorizes existing comparative
health policy literature to highlight the character,
possibilities and limits of such work. The concluding section
returns to the basic theme: the real promise of comparative
scholarship and the quite mixed performance to date.
______________________________
W O R K I N G P A P E R Abstracts
_________________________________________________________________
"Health Insurance and Tax Policy"
BY: KARSTEN JESKE
Federal Reserve Bank of Atlanta
SAGIRI KITAO
New York University
Department of Economics
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=805105
Date: August 2005
Contact: KARSTEN JESKE
Email: Mailto:Karsten.Jeske@atl.frb.org
Postal: Federal Reserve Bank of Atlanta
1000 Peachtree Street N.E.
Atlanta, GA 30309-4470 UNITED STATES
Phone: 404-498-8825
Fax: 404-498-8956
Co-Auth: SAGIRI KITAO
Email: Mailto:sk910@nyu.edu
Postal: New York University
Department of Economics
269 Mercer Street, 7th Floor
New York, NY 10011 UNITED STATES
ABSTRACT:
The U.S. tax policy on health insurance favors only those
offered a group insurance through their employers. This policy
is highly regressive since the subsidy takes the form of
deductions from the progressive tax system. The paper
investigates alternatives to the current policy. We find that
the complete removal of the subsidy results in a significant
reduction in the insurance coverage and serious welfare
deterioration. However, eliminating regressiveness in the group
insurance subsidy and extending benefits to the private
insurance market improve welfare and raise the coverage. Our
work is the first in highlighting the importance of studying
health policy in a general equilibrium framework with an
endogenous demand for the health insurance. We use the Medical
Expenditure Panel Survey (MEPS) to calibrate the process for
income, health expenditure shocks, and health insurance offer
status and succeed in producing the pattern of insurance demand
as observed in the data, which serve as a solid benchmark for
the policy experiments.
JEL Classification: E21, E62, I10
______________________________
"Offers or Take-up: Explaining Minorities' Lower Health Insurance
Coverage"
BY: MARJORIE HONIG
Hunter College, City University of New York -
Department of Economics
IRENA DUSHI
Hunter College
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=803006
Date: August 2005
Contact: MARJORIE HONIG
Email: Mailto:Marjorie.Honig@hunter.cuny.edu
Postal: Hunter College, City University of New York - Department of
Economics
695 Park Avenue
New York, NY 10021 UNITED STATES
Phone: 212-772-5397
Fax: 212-772-5398
Co-Auth: IRENA DUSHI
Email: Mailto:irenad1@gmail.com
Postal: Hunter College
Research Department
60 East 86th Street
New York, NY 10028 UNITED STATES
ABSTRACT:
There is considerable evidence that minorities are less likely
than whites to be covered under employment-based health
insurance. In 2001, rates of Hispanic full-time workers were 21
and 15 percentage points lower than those of non-Hispanic white
men and women. For policy purposes, understanding whether these
disparities are generated by differences in the likelihood of
being in a job offering coverage or in decisions regarding
take-up of offered coverage is critical. We find significant
effects of race and ethnicity on offers but not on take-up,
controlling for job and demographic characteristics including
nativity. Magnitudes of these effects differ by gender and
household composition. Data are from the 1996 Panel of the
Survey of Income and Program Participation (SIPP).
JEL Classification: I10, J32, J15
______________________________
"Workers' Compensation: Benefits, Coverage, and Costs, 2003"
BY: ISHITA SENGUPTA
National Academy of Social Insurance (NASI)
VIRGINIA P. RENO
National Academy of Social Insurance (NASI)
JOHN F. BURTON
School of Management and Labor Relations
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=782341
Date: July 2005
Contact: VIRGINIA P. RENO
Email: Mailto:vreno@nasi.org
Postal: National Academy of Social Insurance (NASI)
1776 Massachusetts Avenue, NW
Suite 615
Washington, DC 20036-1904 UNITED STATES
Phone: 202-452-8097
Fax: 202-452-8111
Co-Auth: ISHITA SENGUPTA
Email: Mailto:isengupta@nasi.org
Postal: National Academy of Social Insurance (NASI)
1776 Massachusetts Avenue, NW
Suite 615
Washington, DC 20036-1904 UNITED STATES
Co-Auth: JOHN F. BURTON
Email: Mailto:jfburton@rci.rutgers.edu
Postal: School of Management and Labor Relations
Piscataway, NJ 08854 UNITED STATES
ABSTRACT:
Workers' Compensation: Benefits, Coverage, and Costs, 2003 is
the eighth in a series begun by the National Academy of Social
Insurance to provide the only comprehensive national data on
this largely state-run program. The study provides estimates of
workers' compensation payments - cash and medical - for all 50
states, the District of Columbia, and federal program providing
workers' compensation.
______________________________
"Insurance and Innovation in Health Care Markets"
BY: DARIUS LAKDAWALLA
The RAND Corporation
National Bureau of Economic Research (NBER)
NEERAJ SOOD
RAND
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=804248
Paper ID: NBER Working Paper No. W11602
Date: September 2005
Contact: DARIUS LAKDAWALLA
Email: Mailto:darius@rand.org
Postal: The RAND Corporation
P.O. Box 2138
1700 Main Street
Santa Monica, CA 90407-2138 UNITED STATES
Co-Auth: NEERAJ SOOD
Email: Mailto:sood@rand.org
Postal: RAND
P.O. Box 2138
1700 Main Street
Santa Monica, CA 90407-2138 UNITED STATES
ABSTRACT:
Innovation policy often involves an uncomfortable trade-off
between rewarding innovators sufficiently and providing the
innovation at the lowest possible price. However, in health care
markets with insurance for innovative goods, society may be able
to ensure efficient rewards for inventors and the efficient
dissemination of inventions. Health insurance resembles a
two-part pricing contract in which a group of consumers pay an
up-front fee ex ante in exchange for a fixed unit price ex post.
This functions as if innovators themselves wrote efficient
two-part pricing contracts, where they extracted sufficient
profits from the ex ante payment, but still sold the good ex
post at marginal cost. As a result, we show that complete,
efficient, and competitive health insurance for innovative
products - such as new drugs, medical devices, or patented
procedures - can lead to perfectly efficient innovation and
utilization, even when moral hazard exists. Conversely,
incomplete insurance markets in this context lead to
inefficiently low levels of innovation. Moreover, optimally
designed public health insurance for innovative products can
solve the innovation problem by charging ex ante premia equal to
consumer surplus, and ex post co-payments at or below marginal
cost. When these quantities are unknown, society can usually
improve static and dynamic welfare by covering the uninsured
with contracts that mimic observed private insurance contracts.