Citation URL: http://www.urban.org/LisaClemans-Cope

Many have suggested that reducing or eliminating the tax exclusion of employer-sponsored health insurance (ESI) could generate significant additional tax revenue to fund expansions in health insurance coverage. In this paper, we focus on two specific policy design elements: (1) a cap, or dollar limit, on the amount of employer-sponsored health insurance premiums excluded from taxable income; and (2) an index that determines how this cap might grow over time. Our analysis shows that limiting the tax exclusion would provide substantial funding for health reform and mitigate the huge inequities built into the current treatment of employer premiums.

In 2004, 89.4 percent of uninsured children who qualified for Medicaid or the State Children's Health Insurance Program lived in families who filed federal income tax forms. This substantially exceeds the proportion of uninsured but eligible children who can be reached through many other outreach strategies. Federal lawmakers could cover uninsured children in these families by: (a) changing federal income tax forms so parents can identify their uninsured children and request coverage; (b) investing in information technology allowing data exchange between states and the Internal Revenue Service; and (c) letting states cover uninsured children if tax information shows they qualify.

Health Savings Accounts (HSAs) and high-deductible health plans are prominently featured in many discussions of health reform. The hope of supporters is that they will make individuals more prudent purchasers of medical care. However, the tax structure and incentives built into HSAs make them most attractive to the high-income and the healthy, populations already advantaged by the current system. HSA/high deductible plans shift more of the health financing burden onto those using significant amounts of care, with negative ramifications for the low-income and high-need. Nor is it clear that cost-containment, higher value shopping, or reductions in the uninsured will follow.

The ability of employed parents to meet the health needs of their children may depend on their access to sick leave, especially for low-income workers. By examining access to paid sick leave and paid vacation using the 2003-2004 Medical Expenditure Panel Survey, the authors find that low-income families are less likely to have access to paid leave, especially if the family lacks a full-time/full-year worker. Among children whose parents have access to paid sick leave, parents are more likely to take time away from work to care for themselves or others.

The Reinsurance Institute provided quantitative modeling and qualitative analysis to states as they explored reinsurance as an element of health reform. The project estimated the impacts of reinsurance, including changes in premiums, employer offer and enrollee take-up of coverage, numbers of people insured, and costs to the state. Small numbers of high spenders account for a large share of health spending, but most spending occurs in lower corridors of expense. Medical spending varies widely by age and health status, creating pressure for risk segmentation. Lastly, defining the eligible population determined whether reinsurance would cover new enrollees or solidify current coverage.

The Reinsurance Institute simulated the effects of reinsurance on individual and employer behavior, observing state-specific characteristics. We constructed a baseline database for each state by reweighting and combining multiple data sources to create a profile of individual-level demographics and health expenditures, allowing for the computation of individual-level premiums. We grouped health insurance units together into risk pools consistent with state market rules to calculate the change a reinsurance subsidy would have on the premium levels faced by individuals and employers. These price changes drove simulated changes in premium and coverage levels, offer and take-up rates, and state costs.

In April, the House of Representatives passed a bill to prevent individuals with Health Savings Accounts from easily, but illegally, evading taxes. The loudest response has been opposition from the insurance industry and its political allies.

This report estimates the benefits and costs of alternative forms of state-funded medical reinsurance in Washington using the Urban Institute's Reinsurance Model. A subsidy targeted at all small firms would substantially increase primary coverage but would be very expensive, as most benefit would flow to already insured people. Targeting the conventional small group market by excluding association health plans would reduce state cost per newly uninsured person and would bolster existing regulatory requirements for that sector;s insurers to use modified community rating. Any practical program also needs to identify secure funding and maintain cost consciousness among newly reinsured health plans.

This paper presents several options designed to help the Commonwealth of Massachusetts move to universal health insurance coverage. The alternatives all build upon a common base that includes an expansion of the Medicaid program, income-related tax credits, a purchasing pool, and government-sponsored reinsurance. These measures in themselves would not yield universal coverage, nor would an employer mandate by itself. We show that an individual mandate, and an employer mandate combined with an individual mandate, both would yield universal coverage with a relatively small increase in government costs relative to state gross domestic product and current health spending.

This issue brief focuses on how employer-sponsored insurance (ESI) coverage has changed among employees. It begins with a brief description of major forces driving ESI: changes in the workforce and the rising costs of health insurance over the four year period. Next, it examines the decline in ESI among employees and the underlying reasons determining whether an employee has ESI, specifically: employer sponsorship of ESI, employee eligibility, employee participation, and employee participation in ESI available through another family member's job. The issue brief concludes by examining how the reasons for the decline in ESI varied across different groups of employees.

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