THOMAS C. BUCHMUELLER, University of California, Irvine - Economics/Health Care Area, National Bureau of Economic Research (NBER)
Email: tcbuchmu@uci.edu
ALAN MONHEIT, University of Medicine & Dentistry of New Jersey (UMDNJ), National Bureau of Economic Research (NBER)
Email: monheiac@umdnj.edu

The central role that employers play in financing health care is a distinctive feature of the U.S. health care system, and the provision of health insurance through the workplace has important implications well beyond its role as source of health care financing. In this paper, we consider the "goodness of fit" of ESI in the current economic and health insurance environments and in light of prospects for a vigorous national debate over shape of health care reform. The main issue that we explore is whether ESI can have a viable role in health system reform efforts or whether such coverage will need to be significantly modified or even abandoned as reform seeks to address important issues in the efficient provision and equitable distribution of health insurance coverage, to create expanded health plan choices and competition in health insurance markets, and to structure incentives for the more efficient use of health services.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

JONGMOOK CHOE, University of Texas at Austin - Lyndon B. Johnson School of Public Affairs
Email: cjm@mail.utexas.edu

This paper investigates the possible determinants of health care coverage using state-level panel data from the United States for the period of 1999 to 2007. Among other variables, we found that the political preference of each state is strongly correlated with the percentage of people without health insurance. We also found that the results are robust with different econometric models and different combination of control variables.

BARBARA A. BUTRICA, The Urban Institute
Email: bbutrica@ui.urban.org
RICHARD W. JOHNSON, Urban Institute - Income and Benefits Policy Center, National Academy of Social Insurance (NASI)
Email: rjohnson@ui.urban.org
GORDON MERMIN, affiliation not provided to SSRN
Email: merming@gao.gov

High out-of-pocket health care costs may have serious repercussions for older people and their families. If their incomes are not sufficient to cover these expenses, older adults with health problems may have to deplete their savings, turn to family and friends for financial help, or forego necessary care. Or they may be forced to reduce their consumption of other goods and services to pay their medical bills. This paper uses data from the Health and Retirement Study (HRS) and the related Consumption and Activities Mail Survey (CAMS) to examine the impact of health problems at older ages on out-of-pocket health care spending and other types of expenditures. The analysis estimates fixed effects models of total out-of-pocket health care spending, out-of-pocket health care spending exclusive of premiums, total spending on all items except health care, and total spending on all items except health care and housing. The models are estimated separately for households ages 65 and older and those ages 51 to 64.

The results show that medical conditions increase health spending, particularly for households ages 51 to 64, but that health conditions do not generally reduce nonhealth spending. Medical conditions do, however, reduce nonhealth spending for low-income households ages 51 to 64, suggesting that holes in the health safety net before the Medicare eligibility age force some low-income people to lower their living standards to cover medical expenses.

DAVID A. HYMAN, University of Illinois - College of Law
Email: dhyman@illinois.edu

Employment-based health insurance is the Rodney Dangerfield of U.S. health policy: it gets no respect from anyone. Employment-based coverage ("EBC") may not get much respect, but it covers roughly 177 million people - and it appears to have considerable staying power - even if the principal explanation for that staying power is nothing more compelling than inertia. Given the likely prevalence of EBC for the foreseeable future, it is worth emphasizing four important points about EBC and universal coverage. What these points have in common is that they are myths - most people believe they are true, even though they are not. The four "myths" are these:

* Employers pay for EBC;
* There are 45.7 million uninsured Americans;
* Universal coverage means everyone will have access to high quality care;
* Universal coverage will solve the cost problems of American health care.

The paper explains why each of these points are "things people know that aren't so." It then highlights the budgetary and collective action problems with trying to get to universal coverage without relying on EBC, at least for the foreseeable future.

KATHLEEN J. MULLEN, RAND Corporation
Email: kmullen@rand.org
RICHARD G. FRANK, Harvard Medical School, National Bureau of Economic Research (NBER)
Email: frank@hcp.med.harvard.edu
MEREDITH B. ROSENTHAL, Harvard University - Harvard School of Public Health
Email: mrosenth@hsph.harvard.edu

Despite the popularity of pay-for-performance (P4P) among health policymakers and private insurers as a tool for improving quality of care, there is little empirical basis for its effectiveness. We use data from published performance reports of physician medical groups contracting with a large network HMO to compare clinical quality before and after the implementation of P4P, relative to a control group. We consider the effect of P4P on both rewarded and unrewarded dimensions of quality. In the end, we fail to find evidence that a large P4P initiative either resulted in major improvement in quality or notable disruption in care.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

RUTH HELMAN, Mathew Greenwald & Associates
Email: RUTHHELMAN@GREENWALDRESEARCH.COM
CRAIG COPELAND, Employee Benefit Research Institute (EBRI)
Email: COPELAND@EBRI.ORG
JACK VANDERHEI, Temple University - Risk Management & Insurance & Actuarial Science, Employee Benefit Research Institute (EBRI)
Email: TEMPLE@VANDERHEI.COM

This paper presents key findings from the 19th annual Retirement Confidence Survey (RCS), a survey that gauges the views and attitudes of working-age and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. Workers who say they are very confident about having enough money for a comfortable retirement this year hit the lowest level in 2009 (13 percent) since the Retirement Confidence Survey started asking the question in 1993, continuing a two-year decline. Retirees also posted a new low in confidence about having a financially secure retirement, with only 20 percent now saying they are very confident (down from 41 percent in 2007). More workers are also planning to supplement their income in retirement by working for pay. The percentage of workers planning to work after they retire has increased to 72 percent in 2009 (up from 66 percent in 2007). This compares with 34 percent of retirees who report they actually worked for pay at some time during their retirement. Workers who say they are very confident in having enough money to take care of basic expenses in retirement dropped to 25 percent in 2009 (down from 40 percent in 2007), while only 13 percent feel very confident about having enough to pay for medical expenses (down from 20 percent in 2007). Among retirees, only a quarter (25 percent, down from 41 percent in 2007) feel very confident about covering their health expenses. Many workers still do not have a good idea of how much they need to save for retirement. Only 44 percent of workers report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire - and an equal proportion (44 percent) simply guess at how much they will need for a comfortable retirement.

The 2009 Retirement Confidence Survey was conducted in January 2009 through 20-minute telephone interviews with 1,257 individuals (1,001 workers and 256 retirees) age 25 and older in the United States. The RCS was co-sponsored by the Employee Benefit Research Institute (EBRI), a private, nonprofit, nonpartisan public policy research organization; and Mathew Greenwald & Associates, Inc., a Washington, DC-based market research firm.

KANDICE KAPINOS, ISR, University of Michigan
Email: kkapinos@isr.umich.edu

This study examines the changing relationship between spousal health insurance coverage and labor market outcomes for married women over time as healthcare costs have increased. In particular, I investigate how husbands? health insurance coverage offers affect wives? decisions to enter the labor force and work full-time and how this has changed over time. I endeavor to correct for potential biases of these effects by 1) using an instrumental variables model to deal with endogeneity and 2) estimating and netting out likely unobserved heterogeneity biases, such as assortative mating or income effects. Using Current Population Survey data from 1995 to 2005, I find that husband?s employer provided health insurance coverage has a negative effect on wife?s labor supply that has increased (become more negative) over time.