PAUL FRONSTIN, Employee Benefit Research Institute (EBRI)
Email: FRONSTIN@EBRI.ORG

This paper presents findings from the 2008 EBRI Consumer Engagement in Health Care Survey and the 2006 and 2007 EBRI/Commonwealth Fund Consumerism in Health Care Surveys. It examines the availability of HRA and HSA-eligible plans (so-called consumer-driven health plans or CDHPs), as well as employer and individual contribution behavior, time enrolled in such plans, account balances, and rollover behavior.

In 2008, 3 percent of the adult population with private health insurance was enrolled in a health reimbursement account (HRA) or had a high-deductible plan with a health savings account (HSA). An additional 3.6 percent were eligible for an HSA but did not have such an account. Overall, 6.6 percent of adults with private insurance were either in a consumer-driven health plan (CDHP) or were in a high-deductible plan that was eligible for an HSA, but had not opened an account.

Workers with employee-only coverage and an employer contribution have seen their annual employer contributions increase, and a majority of workers with family coverage receive a contribution of $1,000 or more. The percentage of individuals with employee-only coverage contributing nothing to an HSA was 19 percent in 2008. Persons both with and without health problems are about equally likely to contribute to an HSA, and their contribution levels are about the same.

The amount of money that individuals have accumulated in their accounts has grown. The percentage of individuals reporting that they had nothing in their account declined from 14 percent in 2006 to 9 percent in 2008. The percentage of individuals reporting an account balance of at least $1,000 increased from 25 percent in 2006 to 44 percent in 2007, and remained at 43 percent in 2008. The percentage of persons reporting no rollover fell from 23 percent to 16 percent between 2006 and 2008. The percentage reporting a rollover of $1,500 or more increased from 13 percent in 2006 to 27 percent in 2008.

DAVID P. BERNSTEIN, affiliation not provided to SSRN
Email: spstat@yahoo.com

This paper considers whether long term care insurance (LTCI) should receive preferences under the tax code. The analysis in this paper supports the view that additional tax incentives should not be used to stimulate the sale of LTCI. First, funding for long term care should not automatically take precedence over other savings goals like purchasing adequate life insurance, health insurance, and saving for retirement. Second, while many experts believe that LTCI products are substantially improved compared to products previously sold on the market there are still significant problems with many LTCI policies on the market. These problems include: (1) inappropriate sales of replacement policies, (2) the risk of general premium increases, (3) transferring policy obligations to an under-funded state organization, (4) inflexible benefit, (5) Policy-lapse risk, (6) issues pertaining to adverse selection, and (6) affordability. Tax incentives that stimulate the sale of LTCI through 401(k) plans are shown to be especially problematic because diversions of 401(k) savings for the purchase of long term care insurance will increase the number of workers who end their career with insufficient funds for their retirement.

DAVID P. BERNSTEIN, affiliation not provided to SSRN
Email: spstat@yahoo.com

Many policy makers and economists support changes to the U.S. tax code to stimulate decreased reliance on employer sponsored insurance. However, the tax code is not the only law impacting the availability and price of group and non-group health insurance. Outcomes from a health care reform designed to expand coverage by replacing group insurance with non-group insurance depend on two closely related policy choices - the regulation of the non-group health care market and the amount of risk sharing. The replacement of the current system by a non-group market with minimal regulation and minimal or no cost sharing would benefit younger healthier insurance applicants over sicker or older applicants. A reform with an unlimited guarantee-issue requirement and community rating would simply mimic the current system. Younger adults who tend to be uninsured because of cost considerations or lack of access to employer sponsored insurance would likely remain uninsured. A reform expanding non-group health insurance markets is likely to include guaranteed-issue regulations, some restrictions on underwriting designed to balance the interest of sick versus healthy insurance applicants and cost sharing either among insurance firms or between the insurance industry and the government. Cost sharing is necessary to make guarantee-issue rules and rate regulations economically viable. Proposals to fund tax credits for the non-group market through cuts in Medicaid will increase the risk pool of applicants for private insurance and complicate the twin objectives of providing health care to both sick and healthy individuals.

CHRISTEN LINKE YOUNG, affiliation not provided to SSRN

ERISA section 514 preempts many state and local "pay or play" laws, which mandate employer contributions to their employees' health insurance. Given the attention that health insurance received in the presidential election cycle, there is a reasonable likelihood of legislative action to achieve a national "pay or play" health care program in the coming years. But a national bill will leave gaps that states and localities may be able to fill - if they were not preempted by ERISA. Therefore, the negotiation of a national health insurance program should address ERISA preemption in order to enable state experimentation. The Note proposes and evaluates a number of options to amend section 514, ranging from targeted statutory changes to federal agency discretion to "de-preempt" state and local pay or play laws.

BRETT SKINNER, affiliation not provided to SSRN

Healthcare systems in North America are sometimes criticised as being expensive or socially irresponsible relative to comparable systems in OECD (Organisation for Economic Co-operation and Development) countries or regions. These perceived health system failures are often mistakenly attributed to greater private sector involvement in the delivery of medical care or the provision of medical insurance in Canada and the USA. However, the exact nature and scope of state involvement in the healthcare sector in Canada and the USA is also often misunderstood and underestimated. This paper presents a fact-based context for evaluating health policy in North America.

DAVID KAMIN, New York University - School of Law
Email: kamin@nyu.edu

This analysis explores how health status affects the marginal utility of income. To analyze this question, I employ a new survey of subjective well-being, the Princeton Affect and Time Survey (PATS), which asks people to report the strength of a number of different emotions as they went about their activities of the previous day. Based on findings from PATS, I conclude that the marginal utility of income is significantly higher for those who report being not satisfied with their health in terms of average levels of pain, sadness, and stress as experienced during the waking day and, also, when measured in terms of a more comprehensive misery index. Having a reported disability that limits the kind or amount of work in which a person can engage has a much weaker relationship with the marginal utility of income, although there is some evidence that this too increases the marginal utility of income especially in terms of pain reduction. Still, any such positive relationship between disability and the marginal utility of income, as measured in this study, appears limited to those who report both having a disability and being not satisfied with their health. Finally, this study concludes that this positive relationship between poor health status and a higher marginal utility of income is largely limited to those near the bottom of the income spectrum.

JASON M. FLETCHER, Yale University - School of Public Health
Email: jason.fletcher@yale.edu
JODY L. SINDELAR, Yale University - School of Public Health, National Bureau of Economic Research (NBER)
Email: jody.sindelar@yale.edu
SHINTARO YAMAGUCHI, McMaster University - Department of Economics
Email: yamtaro@mcmaster.ca

We present what we believe are the best estimates of how job characteristics of physical demands and environmental conditions affect individual's health. Five-year cumulative measures of these job characteristics are used to reflect findings in the physiologic literature that cumulative exposure is most relevant for the impact of hazards and stresses on health. Using data from the Panel Study of Income Dynamics we find that individuals who work in jobs with the 'worst' conditions experience declines in their health, although this effect varies by demographic group. For example, for non-white men, a one standard deviation increase in cumulative physical demands decreases health by an amount that offsets an increase of two years of schooling or four years of aging. Job characteristics are found more detrimental to the health of females and older workers. These results are robust to inclusion of occupation fixed effects, health early in life and lagged health.