Employment and Health Benefits A Connection at Risk (1993) / Chapter Skim
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1 BACKGROUND AND INTRODUCTION
1 BACKGROUND AND INTRODUCTION
Pages 25-48
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From page 25... ...
Lloyd and Anne do not even think about their old dream of going into business for themselves. Individually purchased health insurance to cover Beth would be expensive or perhaps not even available at any price.
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From page 26... ...
Since World War II, most American workers and their families have come to rely on health insurance provided through the workplace. Recent trends in the general economy and in the health sector have, however, generated considerable uncertainty about the continued availability of such coverage.
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From page 27... ...
Its emergence depended on the voluntary initiative of many private individuals and groups, the largely unintended impetus of federal tax and labor laws, the collective bargaining strategies of trade unions, and the political failure of proposals for universal, public health insurance. Beginning in the early 1930s, this system of voluntary employment-based health benefits experienced three decades of rapid growth.
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From page 28... ...
% Total population 215.9 100 30.1100 Total with private health insurance 158.3 73 20.668 Employer coverage 138.7 64 10.033 Other private coverage 19.7 9 10.635 Total with public health insurance 29.2 14 28.996 Medicare 3.5 2 28.896 Medicaid 21.6 10 2.69 CHAMPUS/CHAMPVAa 5.9 3 1.14 No health insurance 35.7 17 0.31 In family headed by worker 30.5 15 NAbNA In family headed by nonworker 5.2 2 NANA NOTE: Details may not add to totals because individuals may receive coverage from more than one source. aIncludes only the retired military and members of their families provided health coverage through the Civilian Health and Medical Program for the Uniformed Services and the Civilian Health and Medical Program for the Department of Veterans Affairs.
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Table 1.3 presents trend data for six advanced industrial countries using three different measures of health spending: total health expenditures as a percentage of gross domestic product;) an index (1970 = 1.0)
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The trends in U.S. health care spending have focused national attention on the question: what contribution do such high and growing expenditures make to the health status and quality of life of the U.S.
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employers are unique in the discretion they have in determining whether and how to offer health coverage to current and former employees and their family members. This voluntary system of employment-based health insurance has helped bring many Americans advantages that may not be so widely experienced elsewhere.
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In addition, state officials are frustrated because federal laws limit their ability to regulate (directly or indirectly) the health benefits offered by self-insured employee benefit plans and complicate programs to finance care for the uninsured, underinsured, and uninsurable.
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They, too, worry about increased health care spending and about access problems 2For a variety of reasons, this discussion should not be read as implying that changes in the health care financing and delivery in the United States will necessarily lead to improved health status. For example, explanations for differences in international mortality and morbidity statistics are a subject of contention.
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From page 34... ...
In Chapter 2, the committee recognizes the importance of understanding the historical roots of current conditions and debates. It examines how voluntary employment-based health benefits have evolved in this country over the past century and how various efforts to establish state or national health insurance programs have fared.
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WHY THIS STUDY? Given the virtual blizzard of recent reports and proposals on health care reform, what purpose is served by an Institute of Medicine study of employment-based health benefits?
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When this report describes another country's system or a particular reform proposal as employmentbased, it means that employers have or would have some significant discretion in designing or managing health benefits for their employees. A governmentally mandated health insurance program in which the employer's involvement is limited to administering a payroll tax and handling routine paperwork is employment-based in only the narrowest technical sense.
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From page 37... ...
; · systems based on competitive markets for the mandatory individual purchase of insurance with little or no incentive for employer involvement and limited regulation (examples: Heritage Foundation proposal; Responsible National Health Insurance plan)
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Issues and Concerns To guide its examination of voluntary employment-based health benefits, the committee identified several key issues and concerns. Briefly stated, these issues and concerns involve · access to appropriate health care services and improved health status; · risk sharing for medical care expenses among the well and the ill, the high-cost and the low-cost individual, and those at higher and lower risk of future expenses; · portability of medical expense protection and continuity of medical care for individuals; · desirable innovation in health care, biomedical science and technology, and health care administration; · privacy of information about individual health status and health benefit costs and potential misuse of that information; · total health care costs, costs for health services of no or limited value, and overall productivity of resource allocation; and .
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From page 39... ...
With over 12 percent of the gross domestic product generated in the health sector, many organizations, communities, and governmental bodies become very "anxious" about prospective adjustments in resources committed to health care. After all, if health care costs are high, so are health care incomes, and those who receive them can be expected to protect their positions.
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From page 40... ...
Early on, the Institute of Medicine decided to describe this project as a study of employment-based health benefits, not as a study of employmentbased health insurance. One rationale was to reinforce the project's emphasis on the role of the employer not the insurer or other agent as the major private sponsor and purchaser of health benefits.
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From page 41... ...
Even small employers have considerable discretion in a few areas such as deciding whether or not to offer health benefits or how much to pay of the cost of any coverage offered. As noted earlier, a governmentally mandated or statutory health insurance program in which the employer's involvement is limited to administering a payroll tax and handling routine paperwork is employment-based in only the narrowest technical sense.
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From page 42... ...
, has no explicit national policy of automatic or compulsory insurance and therefore does not conform.7 Under a social insurance scheme, private organizations can be involved in program administration and health care delivery. In addition, private health insurance may coexist with social insurance.
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The latter is typically expressed with reference to various financial limits such as deductibles, coinsurance, copayments, and maximum amounts payable. °This report uses the term health insurance in connection with expenses arising from medical care and reserves the term disability insurance for protection against the loss of income due to illness or injury.
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From page 44... ...
unlikely to occur to a large portion of insured simultaneously. The relatively slow development of private health insurance (in comparison with private fire and life insurance)
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. In the health insurance arena, moral hazard has been most widely used to label a rather different behavioral effect of insurance: the propensity of insured individuals to seek and accept more medical care than they would if they lacked insurance.
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Whether characterized as moral hazard or rational decisionmaking, the behavior just described is one aspect of an especially difficult problem in health insurance, biased risk selection. Biased risk selection is a nonrandom process that occurs (1)
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From page 47... ...
individual and small-group purchasers. In turn, risk segmentation can result within a self-insured group when employees are offered a choice of health plans.
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From page 48... ...
. Others conclude that market forces have not worked and cannot work given the nature of health care and health insurance and that existing market structures should therefore be replaced in part or whole by public programs of various sorts.
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