Implications of Health Care Reform for Employers
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Transcript of Implications of Health Care Reform for Employers
8/7/2019 Implications of Health Care Reform for Employers
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Implications of Health CareReform for EmployersAn Analysis o the Patient Protection and Aordable
Care Act
Kosali Simon May 2010
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Contents 1 Introduction and summary
4 New market dynamics and new decisions for employers
6 An employer mandate
9 Subsidies to small employers
11 An individual mandate
12 Insurance market reforms
14 Expansions of public coverage
15 Medicare payment reforms and other improvements in
delivery system quality and efficiency
18 Conclusion
19 Appendix A: The current role of
employers in providing health insurance
26 Appendix B—How do employers react to increasing hea
care/health insurance costs?
30 Appendix C—What do employers say when asked about
opinions regarding health insurance and reform?
32 Appendix D
33 Endnotes
36 About the author and acknowledgements
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1 Center or American Progress | Implications o Health Care Reorm or Employers
Introduction and summary
Te recen enacmen o comprehensive healh care reorm has many implicaions
or American employers and heir workers.1 Bu how hey are aeced by he Paien
Proecion and Aordable Care Ac and he companion Healh Care and Educaion
econciliaion Ac, or, ogeher, he Aordable Care Ac, will depend on acors such as
he size o he employer, amily incomes, and healh condiions o he workers.
More han 160 million (61 percen) o nonelderly Americans have an employmen-relaed
healh insurance policy in 2008. 2 In general, employers are expeced o coninue provid-
ing healh insurance or a large racion o he nonelderly ollowing healh care reorm.
Some small employers will qualiy or emporary subsidies, and large employers ace nes
designed o encourage employers o say in he game. I individuals are no insured, hen
hey ace nes ha add o he incenives aimed a employers. Oher provisions, noably
expanded Medicaid eligibiliy and he availabiliy o low-income premium and cos-shar-
ing subsidies or hose no oered employer coverage, may lead some employers wih low-
skilled workers o drop healh insurance provision, bu or he large majoriy o employers,
he reorms are likely o mainain heir key role.
More specically, key eaures o he enaced nal healh care reorm legislaion include:
• Te creaion o sae healh insurance exchanges wih amily income-based premium
subsidies (no available i oered employer insurance)
• A requiremen ha large employers who do no provide healh insurance (or hose
providing healh insurance whose workers receive subsidies in he exchange coverage)
pay a penaly on behal o heir workers; small employers who oer coverage receive a
emporary subsidy
• A requiremen ha individuals hold insurance coverage—eiher hrough a public pro-
gram, hrough an employer, or purchased hrough he exchange—or pay a penaly
• Insurance marke reorms, including near-communiy raing, guaraneed issue, and
minimum sandards or healh insurance plans
• Expanded eligibiliy o public coverage or all Americans wih incomes under 133 percen
o he povery level, or somewha less han $30,000 a year or aduls in a amily o our
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2 Center or American Progress | Implications o Health Care Reorm or Employers
• Cos-conainmen sraegies ha include Medicare paymen reorms ha aim o
improve delivery sysem eciency and qualiy, a new ax on high-cos healh insur-
ance plans, and new invesmens in delivery sysem inrasrucure, such as comparaive
eeciveness research
• Financing provisions ha include (in addiion o he high-cos-plan ax) reduced growh
o Medicare provider paymens, reducions in Medicare’s paymens o privae healhplans, axes on medical manuacurers, new payroll axes or high-income workers, and
new axes on unearned income
Employers’ coverage decisions will be deermined by hese changes o he healh care
sysem, as well as he aspecs o oday’s sysem ha remain unchanged. For insance,
employer-provided healh insurance coninues o receive a large ax subsidy, being exemp
rom payroll and income axes unlike cash compensaion and unlike he purchase o healh
insurance on one’s own. Large employer policies are also likely o coninue having lower
adminisraive coss relaive o individual policies sold hrough exchanges; small employ-
ers have he opion o buying ino he exchange.3
Among oher provisions, he new healh reorm law also includes demonsraion pro-
grams, innovaion iniiaives, independen commissions, and oher mechanisms o
improve healh care managemen, and redesigned nancial incenives or healh care
providers o reduce he growh rae o healh care and healh insurance coss.4 Cos
conainmen is unambiguously benecial or businesses; he growh o healh insurance
premiums has oupaced inaion and produciviy growh or many years.5 o he exen
ha he legislaion is able o lower healh care cos growh i will bene business because
workers would have o give up less o heir wages or healh insurance. How businesses are
aeced by insurance expansion provisions will vary according o heir characerisics.
Te smaller he employer, he lower he incomes and worse he pre-exising healh saus
o he workers, hen he larger he assisance provided by he new law relaive o he cur-
ren siuaion. Employers wih ewer han 25 ull-ime equivalen employees and annual
average wages below $50,000 will receive emporary subsidies or providing healh insur-
ance, saring in 2010. Employers wih 50 or ewer ull-ime equivalen employees ace no
nes or no providing healh insurance.
All individuals, regardless o wheher hey have an oer o coverage or no, ace nes i
hey are no insured. For he very ew (less han 3.5 percen) employers wih more han
50 ull ime equivalen, or FE employees who do no currenly oer healh insurance,
he law requires hem o provide coverage o all FEs or pay a ne. 6 A more bindingresricion or large employers, however, is ha even i hey oer coverage, hey are liable
or a ne on FEs who do no ake up coverage, or who were excluded rom he oer o
coverage, and receive subsidized coverage rom he exchange.7 Among employers wih 50
or more workers ha oer healh insurance, on average only 54.6 percen o FEs are cur-
renly enrolled in coverage a predominanly low-wage esablishmens.8
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3 Center or American Progress | Implications o Health Care Reorm or Employers
Te ne-based mandae or large employers, and he emporary subsidies or small
employers combined wih he exising ax subsidy and oher exising advanages o bulk-
purchasing policies, ac as incenives or employers o provide healh insurance. Tese
orces ac agains he income-based healh insurance subsidies available or low-income
workers which are available (wih some excepions) only i hey are no provided healh
insurance by heir employer.
How he dieren orces balance ou will depend on he employer’s size and workorce
characerisics. Smaller employers wih a relaively homogeneous low-wage workorce
may raionally decide o drop coverage and oer higher wages insead, beneing rom
he subsidies in he exchange. Larger rms wih a subsanial racion o low-wage workers
who do no currenly oer healh insurance may nd ways o creaively resrucure o he
exen allowed by he law i he subsidies available o heir workers in he exchange exceed
he advanages o employer-provided coverage.
Large rms ha oer coverage bu no o all workers may exend coverage and reduce
wages. A he margin, low-skilled employmen growh may be spurred in small rms and
dampened in large rms because o he relaive advanages rom he new law o being in a
small rm.9 Small employers wih higher-income workers wih high healh care coss may
nd hemselves able o provide coverage because o he near-communiy raing rules in
saes ha did no already have such insurance reorms.
On he ip side, small employers wih workers who have low healh care coss may see
a rise in premiums. Employers in he healh care secor isel sand o gain rom having
greaer demand or heir services when more Americans are insured. And rms o all sizes
and ypes sand o bene rom reducions in healh care cos growh, o he exen hey
maerialize rom cos conrol provisions o he law.
So wha will his all mean or employers? In he pages ha ollow, his paper will unpack
each o hese provisions conained in he new healh care reorms. I do no provide a
deailed accoun o he legislaion or he sake o breviy; summaries are available else-
where.10 Te complexiy o he legislaion means ha his analysis will no capure all
aspecs o imporance o employers. Nor is i mean o be an endorsemen or criicism o
he law. aher, I demonsrae in his paper and he deailed appendices ha employers
are expeced o be aeced by he reorm provisions in dieren ways depending on heir
circumsances, bu ha hey are neverheless expeced o coninue playing a cenral role
in providing healh insurance o workers. I will be imporan or policymakers o monior
he inended and uninended consequences o reorms, and o undersand he ull inci-
dence o coss and benes brough abou by he new laws.
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New market dynamics and newdecisions or employers
New avenues o subsidized access o healh insurance or low income amilies as well as
new nes or hose larger employers who do no oer coverage will change imporan
dynamics ha are characerisic o oday’s healh care insurance sysem.
One o he key eaures o he new law is he creaion o sae-based insurance exchanges,
which will creae a new, regulaed markeplace where privae insurers who mee some
minimum sandards can sell heir plans. Individuals and small rms can purchase cover-
age hrough hese exchanges, and over ime hey will expand o larger employers as well.
Families who mee he income eligibiliy sandard o up o our imes he ederal povery
level, or $88,200 or a amily o our, may receive sliding-scale premium and cos-sharing
subsidies o help hem purchase coverage wihin he exchange (as long as hey have no
received an oer o employer coverage).11
Tese subsidy amouns are indexed o he cos o a medium-priced policy in he sae
exchange. Tey are only available o hose who do no have an oer o employer coverage,
or whose employer coverage does no mee minimum sandards. Lower-income individu-
als, paricularly hose wih incomes a or below 133 percen o he povery level, or slighly
less han $11,000 a year or an individual, would also be eligible or Medicaid coverage.
A he same ime, he ax subsidy or employer-based coverage remains in place, and
employers will coninue o be able o purchase coverage ouside o he new insurance
exchanges. Employer (including sel-employed) provision o healh insurance receives
a subsanial ax bene no available o individual healh insurance. Te amouns ha
employers provide in healh insurance compensaion (as well as he employee conribu-
ions owards coverage) are no subjec o income and payroll axes, as is cash compensa-
ion. Tis coninued ax preerence is one reason why employers’ large role in providing
healh insurance may no change dramaically even when exchanges wih subsidies
become operaional.12
Te exchanges are scheduled o be in place in by 2014, and all individuals wihou access olarge-employer coverage as well as small businesses can sar purchasing rom he exchanges
as soon as hey are operaional. In many cases, his new healh insurance marke will eaure
a greaer degree o coverage, and more ransparen policies han wha are currenly ypical
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5 Center or American Progress | Implications o Health Care Reorm or Employers
in he individual and (o a lesser exen) he small-group markes. And or hose who qual-
iy or income-based subsidies, he pos-subsidy price will be much cheaper han oherwise,
according o he Congressional Budge Oce’s November 2009 analysis.
Small-rm workers are likely o bene disproporionaely rom he subsidies in he
exchange, boh because heir employers do no ace nes i heir employees receive hese
subsidies and because o he greaer concenraion o low-income workers in small rms(see Appendix D).
When CBO looked a he November 2009 proposal rom Senaor Harry eid (D-NV),
hey prediced ha he reorm bill—including insurance exchanges and oher provi-
sions bu no including subsidies—would resul in a ne increase in premiums on average
or individuals who currenly purchase coverage in he nongroup marke; he subsidies
would reduce he ou-o-pocke prices subsanially, or hose who qualiy or i. Furher,
CBO predics ha premiums will say relaively unchanged or small and large employers.
Dynamics ha remain largely unchanged under he enaced legislaion.13
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An employer mandate
Te new healh care law also aims o achieve greaer coverage hrough a combinaion o
an employer and an individual mandae. Employers wih more han 50 FEs are required
o provide healh insurance or ace a ne.14 Employers wih 50 or ewer FEs ace no
penalies or no sponsoring healh insurance.15 Te provision or large rms is echnically
no a “mandae” as he nes only apply when a leas one worker receives a subsidy in he
exchange. Bu i is likely his condiion would be riggered or almos all large rms ha
eiher do no oer coverage or have low ake-up o oered coverage. 16
Wha are he ways in which employers may reac o he employer mandae provisions, and
how do he mandaes inerac wih he individual nes and subsidies? All bene provi-
sions will be reeced in wages, o he exen ha workers value he benes, as poined
ou by hen-Harvard economis Lawrence Summers, hus his discussion views he impli-
caions rom boh a rm and a worker perspecive.17
Only 3.5 percen o employers wih 50 or more workers do no oer healh insurance.18
Bu daa rom he Deparmen o Healh and Human Services’ Medical Expendiure Panel
Survey Insurance Componen, MEPSIC, shows ha among FEs a large rms (50 or
more employees) ha oer healh insurance, he average ake-up rae is 70.7 percen; i is
54.6 percen a employers wih mosly low-wage workers.19
Some FEs are deemed by herm o be ineligible or oered coverage, or various reasons.20
By similar reasoning, an employer whose healh insurance policy was resricive in eligibil-
iy may decide o include earlier ineligible FEs in he policy (and workers who were
oered coverage earlier will decide o ake up coverage now) provided he amoun o he
ne is greaer han he subsidies he worker would receive in he exchange. Noncomplian
employers ace hree opions:
1. Provide health insurance (or make existing coverage more generous) to avoid the
fine. Firms wih higher-income workers who do no qualiy or large subsidies in he
exchange may consider his opion, especially i he decision o oer healh insurancewas a close call in he rs place. Ta is, suppose workers a he rm would be willing o
give up $4,000 a year or single coverage, bu because he employer cos was $5,000, he
rm oped no o provide coverage in he pas. When a ne o $2,000 per worker and
$695 as he individual ne is imposed, he “value” o coverage has now risen o $6,695
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(he direc bene, plus he avoidance o he nes). Since he cos o an employer policy
is now lower han he bene o workers, he employer will reac o he ne by provid-
ing coverage.
2. Pay the fines, passing the costs on to the workers through lower wages. I a rm
has very low-income workers who qualiy or premium and cos-sharing subsidies in
he exchange in excess o $2,000, his rm and is employees may decide o incur hene because he bene o paricipaing in he exchange is greaer. In boh he case o
he rs and he second opion, he new employer coss ranslae ino wage decreases,
provided ha heir wages were no so low o begin wih ha he employer is unable o
pass he new coss on in his manner. Te increase in he per-worker coss due o healh
reorm could be viewed similar o a minimum wage increase, and i could have similar
disemploymen eecs. For insance, a rm ha pays a ne o $2,000 per FE who
works 2,000 hours a year will view his as a $1 per hour rise in he minimum wage.
3. Attempt to downsize the number of FTEs to 50 if close to it and not offering cover-
age or experiencing low take-up. Tere are some provisions in he law ha resric
he exen o which his could occur. For insance, a rm canno replace ull-ime
employees wih par-ime employees; alhough par ime employees are no covered by
he mandae, hey coun owards he calculaion o rm size. Tere may also be some
limis o he exen ha large rms could creae small subsidiaries or conrac ou some
aciviies o appear like a small rm. In reverse, a smaller nonoering rm considering
adding on urher workers also considers he implicaions o crossing he 51s worker
hreshold. Te employers a ha margin would ace a seep ax or he addiional
worker hired, as i would now be liable or a ne o $42,000 as long as a leas one o he
51 FE receives a subsidy in he exchange.
Te requiremen ha children can remain on a paren’s employer policy unil age 26(unless oered coverage by heir employer) is also an employer mandae o sors. W hile
employers earlier ended o phase dependens o policies prior o age 26, he new law
means han more young aduls will be covered by employers. Tese are likely no high-
cos individuals given heir ages.
Employer mandaes proposed several years ago by oher saes, such as he case in New
York Sae and Caliornia, applied o smaller rms wih lower raes o oers. esearchers
have commened on he impacs hey may have on wages, healh insurance, and levels o
employmen. Te ndings in a recen review sugges ha depending on how an employer
mandae is srucured, i could increase he coverage rae o he populaion bu also have
subsanial negaive impacs on hiring because o he ineracion beween hese laws andhe minimum wage laws.21
Te curren employer nes are much lower han hese earlier proposals—an annual $2,000
ne per FE would ranslae o $1 per hour. In conras, previous analysis demonsraed
ha i an employer is required o conribue $3 an hour o healh insurance provision, jobs
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paying near he minimum wage may be eliminaed. Te curren law also conains a provi-
sion ha amends he Fair Labor Sandards Ac o preven he ring o workers who rigger
nes or he employers. o he exen ha disemploymen (or no adding workers ha oh-
erwise would be hired) were o occur, Kaherine Baicker o Harvard Universiy and Helen
Levy o he Universiy o Michigan nd ha workers who may lose heir jobs as a resul o
an employer mandae are more likely o be high school drop ous, minoriy, and emale.22
Jared Bernsein and Elise Gould o he Economic Policy Insiue noe ha while his
is rue, he ne impac on hese groups mus ake ino consideraion he ac ha he
mandae would also coner large increases in healh insurance levels o members o hese
groups whose jobs are no los.23 o he exen ha small rms are exemp as in he case o
he curren ederal law, he number uninsured who will gain new employer insurance does
no increase by as much because o he concenraion o uninsured workers in small rms.
In summary, he employer mandae in he healh reorm law applies o a raher small racion
o he currenly uninsured employees because o he small-rm exempion, and involves a
ne ha is subsanially less han he ull cos o coverage, bu may inerac wih he oher
aspecs o coverage expansions such as income-based subsidies and individual mandaes. In
addiion, he low ake-up rae a large employers wih low-wage workers may rigger nes
unless hose workers have coverage rom Medicaid or oher sources. Tere are a hos o oher
acors ha employers will consider in heir response o he mandae, hus policymakers will
need o monior boh he inended and uninended consequences o he new law.
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Subsidies to small employers
Under he new law, small rms (ewer han 25 workers) wih lower-wage employees
(under $50,000 in annual average pay) will receive a reundable ax credi or a maximum
o our years i hey oer healh insurance in 2010, and a maximum o wo years i hey
oer healh insurance anyime afer 2014. Te maximum credi in 2010 o 2014 (35
percen o employer porion o conribuions o healh insurance) is available o rms
wih ewer han 10 employees wih workers who earn on average $25,000 per year or less.
When ully phased in, he maximum rae is 50 percen insead o 35 percen. Currenly,
only abou 18 percen o low-wage rms wih ewer han 10 employees oer healh insur-
ance o heir workers.24
Tere is mixed evidence rom economic research on wheher small rms ha do no
currenly oer healh insurance will do so when subsidies are oered. On he one hand,
experimenal sudies sugges ha even when hal o he cos o coverage is subsidized,
small rms are relucan o oer healh insurance. (See Appendix C on page 30). Work by
oger Feldman and colleagues a he Universiy o Minnesoa also nds relaively inelasic
demand.25 In surveys, small employers also say ha he cos would have o be reduced
quie subsanially or hem o oer healh insurance.26
Healh economiss Jon Gruber and Michael Letau nd greaer price elasiciy, noing hasmall rms would decrease heir oers o healh insurance by 7 percen or every 10 per-
cen increase in he price o healh insurance.27 Tis suggess ha small employers may also
be responsive o subsidies. Bu given he curren cos o a comprehensive policy and he
emporary naure o he subsidies in healh care reorm law, even a 50 percen subsidy may
no reduce he ne cos o a level ha currenly uninsured small rms eel hey could pay.
A more relevan quesion ha low-wage small rms will ace is wheher o drop coverage,
explicily choosing beween uilizing he new employer subsidy or aking advanage o
he subsidies heir workers may ge in he exchange. For example, a worker earning abou
$20,000 (roughly 133 percen o FPL or a amily o wo) whose employer conribues
abou $3,000 owards a single policy cosing $4,000 oal, would ge a maximum o $1,500per worker or wo years hrough he small employer subsidy. Tis same worker would
be eligible or larger subsidies or he amily in he exchange (or or Medicaid) and would
receive higher wages i he rm did no provide hem wih healh insurance.
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Te workers in hese low-wage rms are likely o see wages increase because o he
exchange and he subsidies available here, more so han because o he small employer
healh insurance ax credi. O course, o he exen ha some low-wage small employers
do no drop coverage, hey will receive a subsidy. Subsidies, like axes, ulimaely all on
workers, hus hese small employer subsidies should lead o emporary and small wages
increases or qualiying low-wage small rms ha currenly oer healh insurance.
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An individual mandate
As alluded o in several places already, he new law requires individuals obain coverage ha
mees minimum sandards. Individuals who remain uninsured will pay a ax penaly unless
hey all ino an exempion caegory based on nancial hardship (coss greaer han 8 per-
cen o income) or religion. Tis penaly would equal $695 per person per year, o a maxi-
mum o $2085 per amily or 2.5 percen o amily income when ully phased in by 2016.
As early resuls in Massachusets demonsrae, hese penalies are likely o reinorce
employer coverage. In he rs wo years o implemenaion, more workers received an
oer o employer-sponsored coverage compared o he period beore reorm, and more
workers enrolled in his coverage.28
For a higher-income, healhy individuals in small rms wihou curren oers o healh
insurance, paying a ne may be preerable o purchasing near-communiy-raed healh
insurance. Tis incenive or selecion is limied somewha by he ac ha someone wih-
ou coverage will no be able o buy coverage he momen hey all ill as here will be one
open enrollmen period in a year. Te amoun o he penaly, and he hreshold or hard-
ship exempions are airly low relaive o he cos o buying healh insurance, allowing his
proposed requiremen o be characerized as a “loose” mandae. Bu as we have seen, hey
are relevan or employers o consider as hey reinorce he employer nes or large rms.
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Insurance market reorms
In addiion o creaing healh insurance exchanges, he new healh law regulaes he insur-
ance marke—wihin and ouside hese exchanges—by prohibiing sandard indusry risk
selecion pracices, paricularly pracices prevalen oday in he individual and small-group
markes.29 Pre-exising condiions exclusions, which are currenly limied by sae or ederal
laws, will be urher reduced. For a ransiion period, ederal unding or high-risk pools will
provide a emporary alernaive coverage source or individuals wih pre-exising condiions.
Porabiliy provisions will be urher enhanced. Ulimaely insurers will be required o
issue policies o all applicans, wihou regard o healh hisory, and canno vary prices
based on healh saus. aing rules will enable insurers o vary prices or limied char-
acerisics, including age (o a 3-1 raio) and obacco use. All plans sold on he exchange
(oher han some young adul plans) will be required o mee cerain bene sandards.
Under hese provisions, here will be redisribuional implicaions; employers whose
workers are high healh care users will bene disproporionaely relaive o rms ha
have lower-cos workers. Tis achieves he goal ha hose who are in worse healh should
no have o necessarily pay more or healh care insurance. Wharon School o Business
economics proessor Mark Pauly, in discussing he eciency equiy radeos in com-
muniy raing, noes ha he goal o providing proecion rom he uure probabiliy o becoming a bad risk need no go hand in hand wih redisribuion.30 Guaraneed renew-
abiliy—anoher proecion wihin he bill—also provides a mechanism o insuring
agains “reclassicaion risk,” or ha one could be required o pay a premium every period
(saring while healhy) o preven uure increases in premiums.
In addiion o he redisribuional implicaions, communiy raing in healh insurance also
raises concerns abou adverse selecion, where insurance may disproporionaely atrac
high risks. Te availabiliy o dieren levels o generosiy wihin coverage choices could
also lead o more generous insurance producs atracing higher risks han oher plans.
Te resul is ha premiums would be higher han hey would i he risk pool were more
comprehensive, i mandaes do no appear o be very binding.
Saes have been acively adoping guaraneed issue, raing reorm, pre-exising condiions
mandaes, and similar policies since he 1990s o improve equiy in he healh insurance
marke or small rms. Tese “small group healh insurance reorms” were also enaced o
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a lesser exen in he individual marke, and some o hese sae laws were models or ederal
laws hrough he 1996 Healh Insurance Porabiliy and Accounabiliy Ac legislaion.
Bu wih ew excepions, hese sae reorms have no meaningully addressed pricing
issues. Tere is some evidence ha sicker and healhier groups were aeced in opposie
ways, bu on ne he impac o hese laws have been very small and here is no evidence
ha hese laws improved insurance oucomes or small rms on ne. 31
In he individual marke, here is more evidence o adverse selecion behavior.32 Because
o hese possible negaive consequences o adverse selecion, he reorm law includes
mandaes or employers and individuals. o he exen hese mandaes are seen as binding
and keep he healhy rom dropping coverage, he impacs o he new laws may dier rom
prior experiences. In is assessmen, CBO expecs ha adverse selecion in he nongroup
and small-employer plans will be airly l imied. CBO urher anicipaes ha large groups
may see an improvemen in he composiion o workers as some o he sicker workers may
shif o he nongroup marke or he subsidies, and as he individual mandae may bring
some o he healhier workers who do no elec coverage and he newly eligible depen-
dens under age 26 ino heir employer plans.
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Expansions o public coverage
As menioned earlier, he new healh law expands public coverage under Medicaid o
everyone living in amilies wih incomes below 133 percen o he ederal povery level,
or approximaely $11,000 or a single individual. Since children are already eligible under
he Sae Childrens Healh Insurance Program o more generous levels o coverage, his
expansion will largely bene aduls who do no qualiy or medical coverage oday as
eligible parens, seniors, or people wih disabiliies. While employers are ned when work-
ers receive subsidized coverage in he exchange, hey do no ace similar nes when heir
workers receive coverage rom Medicaid.33
Will his lead o rms wih workers newly eligible or Medicaid o drop coverage? Tere
is a range o esimaes o his “crowd-ou” phenomenon rom he lieraure on children’s
expansion, wih some suggesing ha abou hal o all new enrollmen in public coverage
comes rom reduced privae employer coverage.34
Te exen o subsiuion o coverage is likely o be less han wha sudies o recen
SCHIP expansions have ound as he new expansions arge a much lower income group
han has been argeed in recen children’s healh insurance expansions. Daa rom he
2009 Curren Populaion Survey shows ha among aduls ages 19 o 64 in amilies wih
incomes lower han 150 percen o he ederal povery line, only 19 percen repored someorm o employer coverage during 2008.35 I is also he case ha even i low-income work-
ers wih employer coverage subsiued oward public coverage, he workers should recoup
he benes as lower ou-o-pocke spending and higher wages. Anoher implicaion o
public healh insurance expansions, especially or small employers, is ha i will become
easier o atrac low-wage workers (who may have earlier sough employmen in large
rms o nd healh insurance) wihou oering hem healh insurance.
Te upsho: Medicaid expansions and low-income subsidies in he exchanges are likely
o bring subsanial benes or small employers o low-wage workers. Te exen o he
crowd-ou may be limied boh because o he low incomes o he newly eligible popula-
ions, he employer nes or ailure o cover workers who atemp o receive income-basedsubsidies in he exchange (bu no Medicaid), and he coninuing ax subsidy given only
o employer-provided healh insurance.
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Medicare payment reorms andother improvements in deliverysystem quality and eiciency
Te Aordable Care Ac leverages Medicare paymen policy and oher ools o spur
innovaive changes in provider paymen, healh care delivery, and paiens’ experiences in
he healh care sysem. o begin wih, he Ac species wo ypes o changes in Medicare
paymen. Firs, i includes a number o “radiional” Medicare savings proposals. Many o
hese provisions should reduce growh o paymens or various providers, including hospi-
als, home healh agencies, long-erm care hospials, nursing homes, and hospices.
Ohers will modiy paymen mehods or Medicare Advanage plans, he privae insur-
ance plans ha conrac wih Medicare o provide coverage o Medicare beneciaries.
Anoher group o proposals under his umbrella will require, over ime, ha paymen o
some providers o be ied o various measures o qualiy, while oher providers will begin
submiting qualiy-reporing daa, albei wihou he nancial incenives inheren o pay-
or-perormance paymen policies.
In addiion, he new law requires he Ceners or Medicare and Medicaid Services o
launch a series o reorms designed o ransorm nancial incenives rom he curren
pay-or-volume inducemens o ee-or-service o paymens ha reward care coordinaion
and qualiy. Case in poin: he combined law will require CMS o launch “shared savings”
approaches o paying Accounable Care Organizaions—a nework o providers whoassume responsibiliy or a dened panel o paiens—and o experimen wih bundling
paymens or pos-acue care.
Te CBO orecass ha he new healh reorm law’s shared-savings approach could save
$4.9 billion over 10 years. Should his iniiaive realize hese savings, and should pri-
vae payors ollow sui, i could produce urher savings as provider pracices change in
response o hese new incenives. I hese evens come o pass, employers and workers
sand o bene rom reduced cos growh.
Te new healh reorm law includes addiional demonsraion auhoriy and oher sraegies
or enhancing paymen innovaions, improving eciency, and demonsraing he degreeo which new nancial incenives can inuence coordinaion o care and improved qualiy.
Tis all would be done hrough an “innovaion cener” wihin CMS charged wih esing
innovaive paymen and service delivery models wihin Medicare and Medicaid, includ-
ing almos all mechanisms ha have been suggesed as poenially cos savings, as well as
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models ha are no enumeraed wihin he reorm bill bu ha hold promise or reducing
coss and mainaining or increasing qualiy o care. Tese reorms, i eecive, could be
implemened on a wide basis wihou he need o seek urher approval rom Congress.
Te new law also envisions urher use o healh inormaion echnology, comparaive
eeciveness research, and oher ools or improving healh sysem eciency. Tere is
mixed evidence on wheher healh care coss will be reduced by adoping such programs.Former RND economis Melinda Beeuwkes Bunin (now a ASPE) and Harvard econo-
mis David Culer esimae ha $2 rillion could be saved in oal healh care spending
over 10 years hrough sysem modernizaions, including paymen innovaion and greaer
use o healh I.36 Te CBO, however, esimaes ha savings rom healh I and compara-
ive eeciveness research are by no means assured.
Oher policy iniiaives ha may lead o savings include invesmens in comparaive
eeciveness research. Tere is a public good aspec o knowing he relaive eeciveness
o dieren medical soluions o he same problem. Currenly, no one eniy in he privae
secor has an incenive o engage in his research, hus paymens are being decided sub-
opimally. Public invesmen in comparaive eeciveness research could give physicians,
paiens, and oher paries beter ools or conrolling healh spending, bu here is a grea
deal o uncerainy regarding he eeciveness o he laws in being able o conrol coss.
Other reorm inancing mechanisms o interest to employers
A eaure o he healh care sysem ha economiss ofen poin o as disoring he
employer role in healh insurance, muing incenives o conrol coss, and leading o
regressive subsidies is he ax subsidy provided o employer healh insurance. As poined
ou above, his ax subsidy is unalered under he new law, excep or he “Cadillac ax.”Under his policy, insurers are charged a ax o 40 percen on he op porion o plans ha
cos more han $27,500 a year or amily coverage and $10,200 or individuals, beginning
in 2018 and subjec o cerain exempions. Mos employers and insurers could probably
adjus heir plans in he near run so ha hey purchase a policy jus below he hreshold
and escape he ax alogeher.37 Tis eaure, however, is expeced o exer some pressure o
keep premium growh down, especially as he hresholds are no indexed or inaion.
Tus ar, he discussion has reaed he income-based exchange subsidies and Medicaid
expansions as a “ree lunch” o employers. Tese expansions are nanced by a combinaion
o new axes, Medicare savings, and oher savings provisions. Te new axes (on capial
gains axes, payroll and income axes or he very wealhy, and on medical manuacurers)may increase he coss or businesses hrough direc and indirec avenues, aecing busi-
ness invesmen decisions.
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Tere are also eaures ha reduce exising subsidies, such as a halving o he limi or
exible spending accoun conribuions. Bu none o hese are employer axes per se,
even i described as such in legislaion; like all axes, hey will evenually be shared among
consumers, workers, and shareholders. Te botom line is ha here is diuse incidence
o coss and benes rom he new law; businesses are likely pay close atenion o hese in
decision making regarding healh insurance and oher maters.
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Conclusion
Employers are acive agens on behal o heir employees in he U.S. healh insurance mar-
kes, and he healh reorm legislaion signed by Presiden Obama has many implicaions
or hem. Tis is especially rue or larger rms wih workers rom low-income amilies,
whose decisions regarding oering generous coverage may be aeced by healh reorm.
Employers will be encouraged o exend or mainain heir role in providing healh insur-
ance wih carros and sicks.
Ulimaely, he degree o which employers’ cos growh will slow will depend on he
savings ha could resul rom adminisraive simplicaions, increased compeiion, and
ransparency in he marke, weighed agains he premium increases ha could arise rom
greaer coverage o services, adverse selecion due o resricing price variaion based on
individual characerisics ha are predicive o healh care coss, and nonbinding mandaes
o purchase coverage.
esearch suggess ha legislaion is likely o have heerogeneous impacs on dieren
ypes o employers. eorms will increase demand or employer-sponsored insurance
among some workers, and decrease demand among ohers. Employer penalies eiher
ose or magniy hese incenives. Uncerainies in he anicipaed eecs depend on he
ake-up o public coverage and income-based subsidies, he enorcemen o and reacionso individual and employer mandaes, he exen o which rms end o be homogenous
in he amily incomes o workers, and he exen o which premium changes may occur.
Atenion also needs o be paid o he incidence o axes and subsidies—ha is, recogniz-
ing ha workers, no employers, ulimaely pay he coss o heir healh insurance.
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Appendix A: The current role o employers in providing health insurance
What do they do and why do they do it?
In no oher counry do employers play as subsanial
a role in healh insurance as in he Unied Saes.38 In
he middle o he las cenury, warime ani-inaion
policies capped wage increases (bu no ringe bene-
s) leading employers o play a bigger role in healh
insurance. In order o atrac workers during a labor
shorage, employers included healh care coverage
ino he compensaion package. Tis iniial hisorical
even, coupled wih a ax sysem ha allows healh
insurance coss ha ow hrough he employer o
be reaed as ax-exemp paymens o he worker,39
and he lack o alernaive mass purchasing orms or
poliical suppor or an alernaive caused he sysem
o persis.
While employers are ofen reerred o as he provid-
ers o healh insurance, in realiy hey are hird-pary agens in a ransacion beween a healh insurance
company and he ulimae cusomer, he worker and
his/her amily. Group purchasing occurs in many
oher setings as well, such as businesses banding
ogeher o purchase raw maerials in he grocery
indusry, where group purchasing organizaions
may negoiae discouns or beverage purchases on
behal o a large number o grocery sore cliens, or
individuals banding ogeher hrough nonemployer
organizaions o purchase homeowner’s insurance.
Tere is well-developed heory in economics per-aining o group decision making relaed o he level
o service o “public goods” o be provided.
In he conex o employers and healh insurance,
his heory was rs pu orward by Goldsein and
Pauly in 1976.40 Tey compare he decisions regard-
ing employer provision o healh insurance o ha
o a local governmen deciding on he level o a
local public good, such as a library, which provides
a broadly similar level o bene or everyone in
heir group o consiuens, and is excludable o
consiuens o oher jurisdicions. Some eaures o
employer healh insurance are closer o local public
goods han ohers. Employers usually oer broadly
similar levels o coverage o all heir workers (or o
groups o workers). While i is commonly believed
ha he Inernal evenue Code requires his level
o comparabiliy, hese ax provisions apply only
o sel-insured rms, which comprise he majoriy
o large employers.41 Bu even in hese sel-insured
plans, no everyone in a group necessarily has he
same coverage because employers ofen oer morehan one opion, 42 and some employees decide no
o ake up healh insurance a all.
Goldsein and Pauly consider dieren heories o
group purchasing, including one where workers sor
hemselves ino heir ideal rm in erms o he mix
o benes and wages, assuming ha hey can choose
rom rms wih innie combinaions o wages/
benes. Te marginal revenue produc o labor
(essenially he produc ha he worker makes imes
he marke price or i ha he rm can obain) musequal he sum o heir wage and bene compensa-
ion ha he rm incurs, he “oal compensaion.”
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How ha is divided ino wages and benes is
decided upon by workers. I here are workers who
do no like he combinaion available a ha rm,
hey will move elsewhere.43 Given ha here are
economies o scale in providing ringe benes,
his heory predics ha employers would band
ogeher unil hey reached a size ha minimizes hecoss o ringe bene provision. Employers could
band ogeher hrough an arrangemen such as a
af Harley plan or oher muliple employer plans
wihou he rms necessarily merging. Bu hisory
has shown ha employers have no ound suiable
ways o band ogeher or healh insurance purposes,
leaving small rms a a disadvanage in providing
ringe benes. Te heory predics ha small rms
are hen more likely o oer compensaion packages
ha involve no ringe benes, and workers wih a
high preerence or hose ringe benes will concen-
rae in large rms.
In mos cases, workers do no have a choice o
jobs ha oer hem every possible combinaion o
wages and ringes. Firms may need o have a mix o
workers o dieren ages, or example, which would
imply dieren preerences or healh insurance. In
such a heerogeneous seting, one heory is ha he
“median” worker’s preerence may dicae he level o
ringe benes ha will be seleced as he one levelavailable o all a he rm.44
As an alernaive, he rm may chose his level so
ha workers are made as well-o as possible under
his consrained environmen (he consrain being
ha each worker canno ge heir individually
desired level o ringes because i has o be provided
uniormly o all workers a he same level) and
employer coss are minimized. Employers will end
o caer coverage owards poenial employees in
he labor marke oo, while unions caer owards heemployees currenly in he rm, in paricular hose
who are union members.
In heir empirical work, Goldsein and Pauly nd
ha premiums per person are higher in rms wih a
union presence, afer conrolling or oher variables.
Tis suggess ha where unions have more voice in
he decisions relaive o he employer deciding on
he level o ringe benes, more compensaion in
healh insurance occurs. Trough his heoreicaland empirical work, Goldsein and Pauly provide
some ways or us o hink abou how we can ake
insighs rom oher areas o economics, namely he
provision o local public goods, as heory o how
employer healh insurance decisions are made wih
he employer ineracing wih workers.45 In relaing
his lieraure o wheher employers will reac o
new healh care reorm by changing heir decision o
oer healh insurance, a key quesion is he concen-
raion o low-wage subsidy (or Medicaid expansion)
eligible workers in cerain rm, as well as he exen
o subsidy or he median worker. Te subsidies
are only available in he exchange and no hrough
employer-sponsored coverage, however, employers
are consrained o oer airly uniorm benes o all
workers and may only change heir decisions i a vas
majoriy o he workers are likely o be eligible or
subsanial subsidies.
Anoher role ha employers have aken on, in addi-
ion o purchasing healh insurance or workers,is implemening disease managemen and healh
promoion programs (Gabel e al, 2009).46 Te
business case or employers invesing in he healh
o heir workers is eviden in case sudies ha nd
improved risk saus and lower healh care coss,
reduced abseneeism, reduced urnover as a resul o
hese programs. Tese sudies sugges ha employ-
ers have incenives o provide argeed and specially
designed programs above and beyond he provi-
sion o regular healh insurance policies. One could
ake he rising racion o employers who adopprevenion and disease managemen programs o be
evidence ha employers are realizing improvemens
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21 Center or American Progress | Implications o Health Care Reorm or Employers
in proabiliy rom hem. Bu even hough employ-
ers are accusomed o making calculaed decisions
abou wheher o underake business invesmens
in general, hey may no have enough ools a heir
disposal o make such calculaions when i comes
o healh care decisions (Nicholson e al, 2005). 47
Employers also need o undersand beter he eeco increased cos sharing (high-deducible policies)
on healh care coss and produciviy.
The employer’s health insurancedecisions—a series o tradeos
Employer healh insurance decisions are inuenced
by supply and demand acors such as he prevailing
price o a healh insurance policy (which depend on
cos o healh care, he conen o he policy, and he
rm’s characerisics) and he workers preerences
or healh insurance (which depend on he avail-
abiliy o ouside opions, he workers’ produciviy,
and heir healh saus). Like any economic decision,
employer healh insurance deliberaions come down
o cos-bene calculaions a he margin, comparing
supply and demand acors.
Since policy can aec several supply and demand
side eaures (hrough changing ax policy, orhrough he generosiy o alernaive opions),
employers may reac o legislaive reorms by chang-
ing heir healh insurance decisions. Evidence rom
prior economic sudies will help in anicipaing he
naure o he eec. For insance, small employers
who did no earlier oer healh insurance may reac
o he availabiliy o subsidies ha lower heir premi-
ums, bu he subsidies will have o be very large and
susained, based on evidence rom prior sudies ha
sugges employer decision o oer new coverage is
no highly elasic wih respec o price. Employersmay similarly reduce heir generosiy o healh insur-
ance when Medicaid expansions and income-based
subsidies in he exchange commence.
Congressional agencies and privae hink anks have
developed microsimulaion models (boh ones
based on elasiciies rom previous lieraure, as well
as ones ha esimae parameers wihin he model)
ha will be very helpul in anicipaing he coss and
ne newly insured rom dieren proposals.
Employers make a decision abou wheher o oer
healh insurance or no (excep in Hawaii where
here is a sringen employer mandae in place, and
o a lesser exen in Massachusets where here
is a small mandae in place) considering various
radeos. An employer has a cerain amoun o ne
revenue o disribue as compensaion o workers, in
he orm o wages and benes. As Summers (1989)
poined ou, i workers value healh insurance a
exacly he cos o he employer, hen when healh
insurance is provided, he wage decreases by he
ull cos o healh insurance and employmen levels
remain unchanged. Tus, i workers value healh
insurance a more han he ull cos o he employer
(perhaps because heir alernaive opion is more
expensive), hen employmen levels could acually
rise as a resul o oering healh insurance.
In realiy, workers may value healh insurance more
or less han he cos o he employer, bu he exac
magniude o his radeo has been dicul opinpoin, mosly because o a lack o suiable experi-
menal designs.48 Te possible reasons or recen
increases in healh care coss range rom improved
echnology o increased obesiy.49 We do no know
precisely how much workers value wha his higher
cos healh care buys hem, in erms o wages hey
are willing o orego. When workers do no value he
increase in coss a leas dollar or dollar, he number
o jobs will all or similar reasons, even aside rom
binding minimum wage consideraions.
esearchers have ound i dicul o documen
how employers and workers radeo wages and
healh insurance because he wo end o be ighly
correlaed. Ta is, i is hard o nd he equivalen
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22 Center or American Progress | Implications o Health Care Reorm or Employers
job ha does and does no oer healh insurance;
jobs end o be “good” or “bad.” Using husband’s
job characerisics as exogenous deerminans o a
wie’s compensaion package (which assumes ha
married couples do no make join labor marke
decisions), Olson esimaes ha he magniude
o he radeo is a 20 percen lower wage or hewie when she acceps a job wih healh insurance
benes relaive o one wihou.50 I is also no
possible o say wheher he incidence o healh
insurance coss hemselves occurs a he level o he
individual employee or by groups o employees.
Gruber and Sheiner nd evidence ha groups wih
higher healh care coss see lower wages (women
and married men in he Gruber example ha sudies
he imposiion o a maerniy coverage mandae,
and older workers in he Sheiner example where she
sudies variaion in healh care coss across ciies).51
I is unlikely he employer makes his radeo a he
individual worker level, bu he group level a which
he radeos occur (occupaion wihin he rm, or
demographic groups such as age or gender bases) is
no known.
Tere is also evidence ha employees do no view
healh insurance as somehing hey can radeo or
wages easily in he labor marke rom he lieraure
on “job lock,” a phenomenon where workers wano leave he employer or a beter produciviy
mach elsewhere, bu eel locked in because he new
employer may no provide healh insurance. Sudies
by Madrian and Gruber or example, 52 provide evi-
dence ha having employers provide healh insur-
ance creaes such hurdles o job mobiliy, bu oher
papers such Kapur (1998) does no.53 Evidence
on he eec o healh insurance on reiremen
behavior, on he oher hand, unanimously nds ha
individuals are less likely o reire early rom jobs
wih healh insurance (Blau and Gilleskie, 1997).54
Bu i is no clear ha providing healh insurance
enhances produciviy (relaive o an equivalen
amoun in wages), e.g. by reaining needed employ-
ees and improving morale.55 Te lieraure on job
lock views increased urnover as being posiive
because workers (paricularly older or sicker work-
ers or hose wih such dependens) hen move o he
bes opions raher han being locked in o a cerain
job due o healh insurance. For he ecien unc-
ioning o he labor marke, mismached workers
need o be able o move o beter suied jobs.
Tere is evidence rom labor economics lieraure
ha workers who change jobs, paricularly he
young, experience wage growh.56 I younger work-
ers swiching rms produces eciency gains or
he economy, hen job lock due o healh insurance
(which would aec older workers more) is no as
serious a consequence or labor marke eciency.
For an individual rm, reduced urnover (by he
mos valued workers) would be pro enhancing.
Evidence o job lock means healh insurance reduces
urnover, bu more so or sicker han healhier
workers. esearch in his area would add grea value;
since i is dicul o empirically ideniy he eec
o oering healh insurance on labor produciviy,
we do no ye know he answer o his quesion.
In a laer secion, I review he lieraure on well-
ness and disease managemen, which has some
resuls peraining o improved healh and reduced
abseneeism.
Te rade-os ha employers see in providing healh
insurance will depend on wha alernaives exis.
Employers realize ha i hey do no oer healh
insurance o heir workers, hose workers will ypi-
cally no be able o ake he equivalen cash wage
(on which hey will have o pay income axes) and
nd a policy o even near equivalen generosiy on
he individual marke. Bu here are some workers
or whom public healh insurance is an opion, and
or hose workers (or heir dependens), he alerna-
ive is no he expensive individual producs marke.
In a similar way, employers may be more likely o
sop oering healh insurance and provide higher
wages i a good alernaive exised ouside o he
employmen relaionship. Tis is more likely o
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23 Center or American Progress | Implications o Health Care Reorm or Employers
occur as public healh insurance eligibiliy limis
rise, as has been shown by he exensive lieraure
on he eecs o Medicaid expansions on healh
insurance. Policy makers are aware o he possibil-
iy o insurance reorms uninenionally crowding
ou employer coverage, and employer mandaes or
oher employer requiremens represen, in par, oneatemp o preven his response.
Empirical determinants o whether airm oers health insurance
Many papers look a wha predics or is correlaed
wih wheher an employer oers healh insurance.
Tese include sudies like ha by Feldman and col-
leagues who look a he causal eec o premiums
on healh insurance oer decisions afer making
economeric correcions or he ac ha only a
selec sample are observed, hose who have bough
policies, o reduced-orm sudies like hose by Gabel
and Jensen or Simon, who sudy he eec o sae
policies on small rm decisions o oer healh insur-
ance using variaion in iming o he laws.57 Also
included are descripive repors like hose by Kaiser
Family Foundaion/HE ha presen oer raes o
insurance by employer characerisics. Tere are also
many sudies ha look a he individual level deer-minans o wheher someone has privae-employer-
provided healh insurance.
Te mos sriking nding regarding he employer’s
decision o oer healh insurance is ha small rms
(25 workers or ewer) are home o he vas majoriy
he ull-ime-working amilies who are wihou access
o employer healh insurance oers.58 Te Kaiser/
HE Employer Healh Benes Survey surveyed
1,997 employers and ound he percenage o small
employers (3 o 9 workers) who oered healhinsurance dropped rom beween 50 percen and 60
percen in he early 2000s, o 45 percen by 2007. For
large rms o 200 or more workers, his sayed a 99
percen. Exhibi 2.3 o heir sudy shows oer raes
by urher breakdowns o rm size. Te percenage o
rms wih 10 o 24 workers ha oer healh insur-
ance is 76 percen (relaive o 45 percen or 3 o 9
workers) indicaing how dieren very small rms
are. Firms wih 25 o 49 workers are a 83 percen,
and rms wih 50 o 199 workers are a 94 percen.59
eecing hese concerns ha healh insurance cossare paricularly burdensome or small employers, he
Senae HELP Commitee recenly held hearings on
he opic o increasing healh insurance coss acing
small businesses.60
Tere are various reasons oher han rm size or
he dierences in healh insurance beween small
and large rms, including he ac ha small rms
end o be dominaed by lower-skilled jobs, higher
urnover, ec. (Abraham, Deleire, oyaly, 2009).61
Oher acors correlaed wih employer healh insur-
ance oers in 2007 rom he Kaiser/HE survey
include region, wih a high o 69 percen oer raes
or employers in he Norheas and 52 percen in he
Souh. In erms o indusries, he lowes oer rae
is 38 percen in reail and highes is 90 percen in
sae/local governmen.
Tere are also imporan dierences by wage level o
he workers, percen o workers who are par ime,
presence o union workers, and age o he workers.When smaller rms (size 3 o 199) are asked he
reason or no oering healh insurance, he reason
mos cied as being “very imporan” is high premi-
ums (72 percen).62 Oher reasons include he rm
being oo small, employees being covered elsewhere,
and he abiliy o obain good employees wihou
oering healh insurance. (Firms were allowed o
designae more han one issue as being a very impor-
an reason).
When hese employers (wih 3 o 199 workers andno oering healh insurance) were asked abou
employee preerences or wages over healh insur-
ance, 71 percen said hey believe employees would
preer higher wages over healh insurance, anoher
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24 Center or American Progress | Implications o Health Care Reorm or Employers
6 percen said hey don’ know, and only 23 percen
said ha employees would preer healh insurance
(bu presumably no a he premium ha is available
o he rm, or else he rm would have oered healh
insurance). Tere are ollow-up quesions asking how
much employers and employees eel hey may be
able o pay or coverage, bu hese quesions do nospeciy a wage ose. Ta is, every employer who
pays workers above minimum wage a year could in
heory ake all ha money o purchase healh insur-
ance insead (hey could legally “aord” o) bu he
labor demand condiions hey ace may no allow
hem o view ha amoun as wha hey eel hey can
aord, and a large racion (39 percen) say hey do
no know.
Employers’ role as healh insurance agens involves
many decisions beyond he basic one o wheher o
oer any coverage. Some parameers are under he
employer’s conrol, while ohers are dicaed by law.
What design decisions do employersmake?
Once employers decide o oer coverage, hey mus
make secondary decisions, such as:
• Who qualies or coverage?• How much coverage will hey oer?
Tis secion briey oulines his decision ree, and
considers exising evidence—when available—on
hese decisions wihin he curren sysem.
Who gets covered by what health insurance
plan within a irm?
ypically, all employees wihin a rm who mee
some atachmen crieria (monhs served, or hours
worked) are covered by he plans wihin a rm.63
Te Employee eiremen Insurance Securiy Ac,
or EISA, saes ha sel-insured employers mus
no provide healh insurance o highly compen-
saed workers on more avorable erms han o
lower-compensaed workers.64 In addiion, all rms
oering healh insurance mus abide by ederal laws
such as he Americans wih Disabiliies Ac, employ-
men discriminaion laws as enorced by EqualEmploymen Opporuniies Commission,65 and he
Healh Insurance Porabiliy and Accounabiliy Ac’s
injuncion agains diereniaing beween sick and
healhy employees in healh insurance design, includ-
ing he ype o plans and benes hey oer, and he
share o premium paid by employees. Some saes
require insurers o oer coverage o all applicans—
ha is, guaraneed issue—and resric he degree o
which insurers may vary premiums.66 Tese resric-
ions are similar o hose now in ederal law.
What amount o health insurance shall be
oered? Will there be choice o plans?
Tere are some consrains on he erms o coverage
ha can be oered, or commercial insurance. Sae
laws (and some ederal laws) sipulae minimum
levels o coverage, i healh insurance is oered a
all. Plans mus include required services, such as
maerniy coverage (a he ederal level) and iemssuch as ineriliy services (a he sae level).67 Saes
also regulae commercial insurance in many oher
ways, such as collecing premium axes and requir-
ing proo o solvency o insurance plans. Firms ha
sel-insure have considerable exibiliy, bu don’
appear o ake advanage o ha exibiliy o evade
bene mandaes.
In ac, sel-insured plans are ofen more generous
han commercial plans and ofen oer nonmandaed
benes. Plan choice goes up wih rm size.68 Aparrom he regulaions relaed o mandaes, he gen-
erosiy o coverage is lef up o employers o decide
upon in he conex o heir business and labor
marke condiions.
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Appendix B—How do employers react toincreasing health care/health insurance costs?
Healh insurance coss represen an increasing
componen o labor inpu coss, a ac ha has been
brough o atenion by auomakers in union nego-
iaions; auo manuacurers poin ou ha healh
care coss per car now ouweigh he cos o seel ha
goes ino a car. Te cos o he average amily policy
bough by an employer in 2007 is $12,106 (Kaiser/
HE, 2007), which is 24 percen as large as median
amily income, $50,233 in 2007 (U.S. Census
Bureau, 2008).71
In order o accep an oer o employer healh
insurance, he median amily mus spend roughly
6.5 percen o heir income, no couning ou-o-
pocke expenses no covered by insurance and
no couning he amouns by which heir wages
are lower o accoun or he employer porion
o he premium. From 2008 o 2009, according
o he Kaiser/HE employer survey, amily premiums or employer-sponsored insurance grew
5 percen. Tis was he fh year in which year-
o-year growh raes ell. Te 2008-2009 growh
in premiums approaches hisorically low levels o
premium growh—he las year ha saw similarly
low year-o-year growh was 1999—bu growh
in premiums coninues o oupace boh earnings
and general inaion and applies o a large base o
employer healh insurance paymens.
esearchers poin ou ha i is imporan o con-sider he reasons or he rise in healh insurance
coss o undersand employers’ responses. I he
increase in healh care coss and healh insurance
premiums is due o changing qualiy o healh care,
and i workers value his improved healh care, hen
wages should in heory adjus downward by he
amoun o he increase in coss, and employmen
levels and all oher oucomes would say he same.
Ohers, such as Gruber (2000), argue ha here
is more o consider in undersanding employer
responses o growing healh care coss. Employers,
according o Gruber, have signican discreion
around hiring and bene decisions, including
wheher o subsiue par-ime or ull-ime work-
ers, wheher o shif o using more capial han
labor, how o design heir oal benes package, and
wheher o oer healh insurance a all.
Gruber also noes ha employers may be con-
srained by minimum wage laws and union
conracs rom reducing wages, and wages may no
adjus or rising healh care coss a he specic
worker level versus a a broader level o aggregaion.
Tese acors sugges ha an increase in he healhcare coss may lead o oher changes in behavior,
such as reduced hiring o ull-ime workers, raher
han jus reduced wages or he group whose healh
care coss rose.
One srand o empirical research ha commens on
he issue o cos examines how sensiive employers
are in heir decision o oer healh insurance when
premiums change. Tis price elasiciy o demand has
been esimaed by Feldman e al (1997) o be such
ha a 1 percen increase in premiums would decreasehe probabiliy ha a rm oers single coverage by
3.91 percen or single coverage and 5.82 percen
or amily coverage. Conicing evidence came rom
he ober Wood Johnson demonsraion projecs,72
which ound ha even i small employers were given
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27 Center or American Progress | Implications o Health Care Reorm or Employers
premium reducions o 25 percen o 50 percen, ew
would sar o oer healh insurance. Gruber and
Letau also nd more modes elasiciies—on he
order o -0.25.
Gruber and Washingon (2005) examine wha
happens when employees are provided wih ax subsidies (when he co-premium is made pre-ax).73
Tey nd ha making employee conribuions
cheaper by proecing hem rom axes does no
change he ake-up decision much, bu insead
increases ax expendiures.
Baicker and Chandra use he exogenous variaion
creaed by medical malpracice growh o ideniy he
impac o rising healh insurance coss on he labor
marke. 74 I is imporan o noe ha his source o
rise in healh insurance cos is one ha workers may
no value, as i does no come rom improved medical
echnology. Tey nd ha a 10 percen increase in
premiums would reduce wages by 2.3 percen or
hose who coninue o receive employer provided
healh insurance. Tis paper also shows evidence o
rising premiums consraining employmen oppor-
uniies, a 10 percen rise in premiums reducing he
level o employmen by 1.2 percen, argued on he
basis ha employers canno cu healh insurance
only or some workers because o nondiscriminaionlaws, hus resor o cuting jobs or reducing hours o
conver some ull-ime posiions o par-ime jobs. In
a 1998 paper, Culer and Madrian ound ha employ-
ers respond o rising healh insurance coss by shifing
o more ull-ime labor, aking advanage o his xed
cos naure o he ringe benes.75
Oher han acceping healh insurance coss pas-
sively and dropping healh insurance coverage or
changing labor marke oucomes, employers also
respond in more acive ways. Larger rms have morebargaining power and can acively engage in cos-
reducing negoiaions more han small rms, bu all
employers hink abou how o deliver healh insur-
ance a he lowes cos possible, shopping around
or services hrough brokers and experimening
wih innovaive sraegies. Some such responses are
discussed below.
Whether to sel-insure health beneits
Sel-insuring healh benes is an opion ha lowers
coss, bu is only available or large rms since i
requires use o in-house capial, or he use o expen-
sive soploss (“reinsurance”) insurance policies.
Sudies ha examine he decision o sel-insurance
have ound mixed evidence or he inuence on
mandaes on rm decisions o sel-insurance.
Gruber76 nds ha bene mandaes have litle
impac on insurance coverage; his could be because
mandaes do no appear o be especially binding,
while earlier work by Gabel and Jensen (1989) nds
ha mandaes are responsible or lack o healh
insurance in 1/6 small rms ha are uninsured,
and 50 percen o large rms ha conver o sel-
insurance. Due o he adminisraive simplicaions
and cos savings associaed wih sel-insurance, mos
large rms (62.7 percen o rms wih 50 or more
workers who oer healh insurance in 2008) cur-
renly sel-insure a leas one produc.77
Whether to use disease management andemployee wellness programs
ecenly, here has been an increase in ineres
among employers in implemening disease manage-
men and wellness programs. Many (28 percen)
employers hough ha disease managemen
programs were “very eecive” (Kaiser/HE,
2007). Only beween 12 o 16 percen hough
ha igher managed care neworks, CDHPs, andhigher employee cos sharing was “very eecive,”
and a similar number hough hey were “no a all
eecive.” However, close o hal hough ha hese
sraegies were all “somewha eecive.”
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28 Center or American Progress | Implications o Health Care Reorm or Employers
Daa rom he UBA 2008 Employer Opinion
Survey,78 which polled 1,664 employers, nds a
large number desire wellness programs and chronic
disease managemen programs, indicaing employ-
ers buy ino he idea ha hese programs will impac
he business. According o William Saord, vice
presiden o member services or UBA “Tis survey illusraes ha employers have a high level o con-
dence in heir abiliy o conrol healh care coss and
ha heir employees can make inormed choices i
given he addiional ools necessary o do so.” Te
survey also nds ha employers are increasing heir
use o wellness programs. In 2008, 9.8 percen o
employers oered wellness programs, while in 2007
his was 7.4 percen.
Tere are hree relaed issues o consider in hinking
o he scope or reducing healh care coss hrough
hese programs. One is o wha degree does modi-
able healh behavior and managemen o reaable
condiions wih beter prevenive/early care aec
healh care coss. Second issue is how successul are
opions available o employers o aec healh behav-
iors and ensure beter managemen o diseases. Tird
is he ime rame during which hese benes occur-
are hey shor erm enough ha curren employers
recoup he benes? Employers have some bene
in serving he role o healh promoion managerbecause employees are physically presen (or
example, in esablishing on sie exercise aciliies).
esearchers have explored he impac o wellness
programs and disease managemen ools on healh
saus, healh care coss, produciviy, abseneeism
and urnover, nding some reason or cauious opi-
mism ha such programs migh produce desirable
oucomes i adoped on a large scale. However, i
mus be noed ha his evidence is rom case sudies.
Firs, here is evidence ha healh risks aec
employer coss and produciviy in signican ways.
A series o papers by Goezel and colleagues using
daa on workers linking healh care and employee
produciviy measures ound ha afer conrol-
ling or demographic and oher acors, hose wih
risky behaviors were ound o incur higher healh
care coss.79 Tere are numerous reviews (ones by
Pelleier) showing ha employer inervenions have
lead o benecial oucomes.80 How much o his is
causal is hard o pin down.
A recen sudy ha overcomes hese esimaion di-
culies is Loepke e al (2008),81 who use an experi-
menal/conrol group seup where 543 employees
o a large company were provided wih healh risk
assessmen programming while wo ses o conrol
group workers were no. Te auhors ound ha
hose who received he risk assessmen were ound
o be in beter healh afer he sudy period (years
2003 o 2005), paricularly in choleserol, die,
subsance abuse, high blood pressure, sress manage-
men, and aciviy and obesiy raes. Tey also ound
ha hese benes persised afer he conrolled
sudy ended (2006 daa), and ha improved healh
was associaed wih reduced abseneeism.
Te evidence on wheher employers, providers, or
he governmen could reduce healh care coss by
encouraging qualiy improvemens in healh care is
less cerain. Oher acive sraegies employers could
pursue o lower healh care coss include atempingo improve qualiy and obain more ransparency on
he provider side, as was ried by he Leaprog group
(Galvin e al, 2005), an atemp by large employers
ha has no been viewed as a noable success. 82
Manipulating plan design
Some elemens o plan design are covered by sae
and ederal law regarding specic bene mandaes.
Federal policy mandaed ha large employers oeran HMO on he menu as long as one exised in heir
area.83 Tis law’s provisions or employers expired
in he 1990s, and managed care has generally allen
rom avor and morphed ino he preerred provider
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29 Center or American Progress | Implications o Health Care Reorm or Employers
organizaion, or PPO, orm ha allowed greaer
reedom, bu uses incenives o keep paiens wihin
nework (Kaiser/HE, 2007).
A new wave o plan design innovaion has been
come o be called “consumer direced healh care”
plans, or CDHPs. While here are sligh variaionsin wha one would reer o as a CDHP, i is com-
monly a high-deducible insurance plan (ypically
a deducible o $1,000 or more), which maybe
oered in andem wih a personal healh accoun
(such as a ax-preerred Healh Savings Accoun ha
can only be used or qualied medical expenses).
As Chrisianson a al discuss in a recen Health
Aairs aricle,84 adopion o “consumerism” hrough
CDHPs has been seen as a way o reduce healh care
coss afer he rerea o managed care sraegies han
pu he onus on he insurer. Tese plans have experi-
enced signican growh in recen years.85
A review o he impac o HSAs and CDHPs by
RND researchers published in Health Aairs in 2006
shows ha here is some selecion ino hese plans
by he healhy, and lower healh care coss; eecs on
qualiy are mixed.86 More recen evidence in 2007 by
Greene and colleagues using claims daa rom one
employer nds ha hose enrolled in CDHPs were
less likely o coninue use o chronic care medica-ions.87 However, owe e al nd ha hose in
CDHPs (wih ree prevenive and screening services)
were no less likely o use prevenive and chronic ill-
ness services relaive o a conrol group in PPOs.88
On ne, he jury is sill ou on wha CDHPs will
accomplish. Te issues ha are raised are he likely
selecion by healhy, leaving he risk pool worse or
oher insurance plans; he possible decreased use
o prevenive care, unless such services are exemp
rom he deducible; he lack o needed inormaion
on which consumers will base healh care decisions;
and he ac ha by deniion, high-deducible plans
will no aec caasrophic coss which are where he
bulk o U.S. healh expendiures lie.
Encouraging workers to take alternative options
Employers have incenives o encourage he use
o alernaive means o paymen (oher han he
employers policy) o cover healh care coss. Tis
could be pushing workers on o spouses’ coverage89
or ono public insurance opions such as Medicaid
and CHIP. Employers’ decisions on reiree coverage
are also likely o be inuenced by he availabiliy o
Medicare. Employers generally adjus heir healh
insurance plans o reirees o be he secondary payer
once Medicare eligibiliy is reached a age 65. Tis
could be viewed as a orm o subsiuion o cover-
age because employers would oherwise have pro-
vided he usual coverage. Tere is a conemporary
issue in his area wih Medicare Par D oering sub-
sidized coverage or prescripion drugs. Employers
were given he opion o receiving a wo-hirds
subsidy rom he ederal governmen or coninuingheir coverage o prescripion drugs in reiree plans
or hose over age 65.90 Tus, no all healh care coss
o he employed (or reired) populaion need o be
covered under employmen-based coverage because
o he exisence o alernaive public programs ha
are designed o mee he needs o hese populaions.
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30 Center or American Progress | Implications o Health Care Reorm or Employers
Appendix C—What do employers saywhen asked about their opinions regardinghealth insurance and reorm?
Tere now exiss some daa rom surveys ha have
asked employers heir opinions regarding heir role
as healh insurance providers, and heir possible
reacions o uure changes in healh care eaures.
In 2002, he Employee Benes esearch Insiue
commissioned a survey and ocus groups o employ-
ers. Te ndings showed ha employers hink o
oering healh insurance as a way o atrac workers,
bu are also cognizan o waning o improve he
healh saus o heir workers. Tey wan o be com-
peiive in he labor marke bu also recognize ha
when here are dual workers in a amily, hey would
raher no be he plan ha is chosen or he amily.
Many quesions o employer opinions are asked as
par o a series o surveys conduced by Gabel and
colleagues naionally. In he one sae ha has acu-
ally implemened reorms recenly, Massachusets,
Gabel e al (2008)91
conduced a special survey o employers in 2007 abou heir suppor or healh
reorm. Tis survey o 1,056 employers was con-
duced afer he reorm legislaion was enaced in
ha sae bu beore he pars ha aec employers
were implemened, and hus serves as a baseline or
laer surveys o employers in he sae.
All employers wih more han 10 ull-ime work-
ers are required o provide healh insurance or pay
a nominal ne o $295 per employee per year. Te
survey ound ha employers, smaller ones in par-icular, were no well aware o he reorms (wih only
14 percen o rms in he 3 o 10 worker caegory
saying hey undersood he plan very well; or rms
in he 11 o 50 size caegory his was 18 percen).
Abou 75 percen o 80 percen o employers under
he 50-employee size repored ha he media was
heir main source o inormaion abou reorm,
while larger employers were more likely o menion
heir brokers han he media.
Smaller rms (50 or ewer employees) were beween
31 percen and 39 percen more likely o srongly
agree ha all employers bear some responsibiliy or
providing healh benes o heir workers. Beween
43 percen and 40 percen o small employers
responded ha hey somewha agree wih his
proposiion. egardless o rm size, he suppor or
employers wih 11 or more workers paying a ne o
$295 per employee wihou healh insurance was
srongly agreed o by abou one-hird o respon-
dens. When employers no oering healh insur-
ance were asked wheher hey would limi pay raises
o mainain heir employees eligibiliy or subsidies,very ew indicaed hey were very likely o do so (17
percen among rms wih 3 o 10 workers and 10
percen among rms wih 11 o 50 workers). Tese
resuls sugges ha employers are airly responsive
o he reorms in Massachusets, alhough here is
low awareness o he deails. I will be imporan or
comparison wih responses afer he reorm plan has
gone ino eec or employers.
A survey similar o he one in Massachusets was
elded in early 2008 in New York, a sae ha hasno enaced large-scale reorm. Simon and Whie
(2008)92 nd ha New York employers o all rm
sizes agree srongly or somewha srongly ha
hey bear some responsibiliy or providing healh
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31 Center or American Progress | Implications o Health Care Reorm or Employers
insurance o heir workers, ranging rom 72 percen
or small rms (2 o 9 employees) o 79 percen or
medium rms (10 o 49 employees) and 88 percen
or large rms (50 or more employees). Employers
also sae hey agree ha individuals above he pov-
ery level bear some responsibiliy or buying insur-
ance, ranging rom 79 percen or small and mediumrms o 87 percen or large rms. o supplemen
he survey, ocus groups were conduced.
When asked wheher employers are in avor o an
employer mandae, in one ocus group, a small rm
owner commened:
“I think everyone would agree here that doing
business, especially or small businesses in New
York State is very tax burdening. To do business
in New York State compared to other states…
imposing another responsibility like this would
just add fnancial pressure on us, especially as
a small business.” (Ithaca)
In 2007 a survey o employers was conduced by
he Caliornia HealhCare Foundaion in Caliornia,
anoher sae ha considered healh reorm.93 When
employers were asked wheher hey suppored
Caliornia’s “pay or play” legislaion, 7 percen o
large rms “srongly” suppored i while 18 percen
o small employers (dened as under 200 workers)srongly suppored i. Tiry-ve percen o small
rms and 38 percen o large rms “somewha” sup-
pored i. weny-one percen o small rms and 13
percen o large rms “srongly” opposed i.
Ye 33 percen o small rms and 48 percen o
large rms srongly agreed ha all rms bear some
responsibiliy or providing healh bene; overall
wo hird o all rms srongly or somewha agreed
on his. Eighy-wo percen o all rms agreed ha
all individuals above he povery level bore some
responsibiliy or buying healh insurance.
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32 Center or American Progress | Implications o Health Care Reorm or Employers
Appendix D—Employer coverageby frm size
Te able above considers he disribuion o work-
ers, and poenial access o employer provision o
healh insurance oday across dieren rm sizes
and amily incomes, in order o see how small rmscompare o large rms. Te CPS does no have a
50-employee rm size classicaion, bu daa rom
he MEPSIC shows ha roughly 50 percen o work-
ers in he 25 o 99 size caegory are in rms o 25-50
workers (AHQ 20101, able I.B.1).94
Firs, his able shows ha smaller rms have a
greaer racion o heir workers belonging o low-
income amilies. Te rows add up o 1, hus hese
daa ell us ha 17 percen o workers in a rm wih
under 10 employees come rom amilies under 133percen FPL, while in rms over 100 workers his is
only 9 percen. Te nex se o rows show poenial
access o employer healh insurance or he worker,
dened as having a leas one amily member
Distribution of nonelderly U.S. Workers and Potential Access to Employer Coverage, by Firm Size
and Family Income
<133%FPL 133-150 150-200 200-250 250-400 >400
Firm Size Distribution o workers
<10 0.166 0.031 0.092 0.091 0.222 0.398
10-24 0.150 0.031 0.092 0.100 0.234 0.394
25-99 0.117 0.031 0.084 0.092 0.236 0.439
100+ 0.090 0.022 0.067 0.078 0.229 0.513
Current Rate o Access to Employer Insurance
<10 0.169 0.307 0.365 0.453 0.609 0.750
10-24 0.224 0.336 0.415 0.583 0.740 0.865
25-99 0.307 0.450 0.565 0.701 0.828 0.916
100+ 0.360 0.527 0.661 0.774 0.878 0.950
Notes: Based on 2008 data from the March CPS of 2009. Fractions add up to 1 in each row in the top segment of the table. Uses sample weights.
covered by employer healh insurance currenly.
Tis does no show wheher people were oered
employer coverage ha hey reused, as he March
CPS does no collec ha. Smaller employers (hosewih ewer han 25 workers) in he lowes income
amilies have very low access o healh insurance
currenly (17 percen and 22 percen), whereas or
he same income caegory, being in a large rm
increases poenial access o employer healh insur-
ance o 36 percen. Even among amilies wih higher
han 400 percen FPL, access o employer healh
insurance is lower in small rms. Te unequal disri-
buion o he uninsured and he low-income workers
across small and large rms are wo acors (com-
bined wih small rms’ emporary subsidies and lack o an employer mandae ne) ha imply small rms
and heir workers sand o experience greaer gains
rom he new law relaive o larger rms.
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33 Center or American Progress | Implications o Health Care Reorm or Employers
Endnotes
1 The Patient Protection and Aordable Care Act o 2010, Public Law 111-148,111th Cong., 2nd sess. (March 23, 2010), available at http://rwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=:h3590enr.txt.pd and the Health Care and Education Reconciliation Act o 2010,Public Law 111-152, 111th Cong., 2nd sess. (March 30, 2010), available athttp://rwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=:h4872enr.txt.pd.
2 The numbers in this paragraph come rom Paul Fronstin, “Sources o HealthInsurance and Characteristics o the Uninsured: Analysis o the March 2009Current Population Survey” (Washington: Employee Benet Research Institute,2009), available at http://www.ebri.org/pd/briespd/EBRI_IB_9-2009_No334_HI-Cvg1.pd.
3 The Congressional Budget Oce Senate bill analysis o November 2009 ore-casts that the exchanges would experience some economies o scale. However,
they are still likely to be less than what large employers receive since contract-ing in the exchanges is done at an individual level. Prior research has ailed touncover substantial economies o scale rom purchasing pools, but were basedon more limited attempts than the planned state-based changes. Elliot K. Wicks,Mark A. Hall, and Jack A. Meyer, “Barriers to Small-Group Purchasing Coopera-tives” (Washington, D.C.: Economic and Social Research Institute, 2000).
4 David Cutler, “Health Reorm Passes the Cost Test” The Wall Street Journal, March9 2010, available at http://online.wsj.com/article/SB10001424052748703936804575108080266520738.html.
5 Agency or Healthcare Research and Quality, “Table I.D.1(2008) Average totalamily premium (in dollars) per enrolled employee at private-sector establish-ments that oer health insurance by rm size and selected characteristics:United States, 2008,” available at http://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/national/series_1/2008/tid1.htm. AHRQ data i s used oremployer premium growth, and Bureau o Labor Statistics, “Productivity changein the nonarm business sector, 1947-2009,” available at http://www.bls.gov/lpc/prodybar.htmwas used or productivity growth numbers. Bureau o LaborStatistics, “Consumer Price Index-All Urban Consumers,” available at http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=CUUR0000SA0&output_view=pct_1mth,was used or infation gures.
6 Only 3.5 percent o rms with 50 or more workers do not oer coverage in 2008;Agency or Healthcare Research and Quality, “Table I.A.2: Percent o private-sector establishments that oer health insurance by rm size and selectedcharacteristics: United States, 2008,” available at http://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/national/series_1/2008/tia2.htm.The new law applies to rms with more than 50 ull-time equivalent workers,thus since coverage tends to rise with rm size, ewer than 3.5 percent o theserms lack oers o coverage. The very ew large rms that do not providehealth insurance pay a ne o $2,000 per FTE (on all FTEs minus the rst 30) themoment that at least one FT E takes government subsidized coverage in theexchange. Given the generosity o the subsidies, it is very likely that all (o theew) large rms who do not oer health insurance would have at least one FTEwho receives a subsidy. In the extreme, i an employer o 51 FTEs does not oercoverage, but has 50 FTEs who receive coverage through, say, spousal employercoverage, and only one FTE who received subsidized coverage in the exchange,this employer pays an annual ne o $2000*(51-30)=$42,000.
7 Large employers who oer coverage but do not have 100 percent take-up pay
the lesser o: $3,000 or every FTE who receives a subsidy in the exchange, or$2,000 per FTE (minus 30). In most cases, the lesser amount is likely to be the$3,000 per FTE who receives a subsidy in the exchange. Employees o rms thatoer coverage are not allowed to receive a premium or cost-sharing subsidy inthe exchange (and thus trigger nes or their employer) unless their employercoverage does not cover at least 60 percent in actuarial value, or i the employeeco-premium exceeds 9.5 percent o amily income. I the worker is under 400 per-
cent o the FPL, and i the employee premium contribution is between 8 and 9.8percent o income, the employer is required to provide the worker with a voucherequal to the employer contribution towards health insurance, with which theymay shop or unsubsidized coverage. The legislation also contains provisionsrestricting waiting periods or employer coverage to no more than 30 days.
8 Agency or Healthcare Research and Quality, “Table I.B.3.b.(2): Percent o private-sector ull-time employees that are enrolled in health insurance atestablishments that oer health insurance by rm size and selected character-istics: United States, 2008,” available at http://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/national/series_1/2008/tib3b2.htm. A low-wageemployer is dened by the MEPSIC survey as one who has more than 50percent o their employees earning $11/hr or less, in 2008. (O all private sectoremployers in the U.S. that have 50 or more employees, 35 percent are low-wageemployers (Table I.A.1)). It is unknown how many o the workers who do nottake up coverage in these rms would be using subsidies in the exchange once
the law is enacted, as opposed to, say, receiving coverage elsewhere as a depen-dent or rom Medicaid. MEPSIC data show that in these low-wage large rms,the employee contribution towards a amily policy was on average $3,784 and$1,025 or single coverage. This represents about 13.5 percent and 7.5 percento income, respectively, or amily o our and or an individual, at 135 percent o the FPL -- just beyond Medicaid eligibility under the new law.
9 See research by Bradley Herring and Mark Pauly (““Play or Pay” InsuranceReorms or Employers”, Jan 14 2010. New E ngland Journal o Medicine vol362:93-95.pp1-3) that illustrates how low-wage workers at high-wage rms thatoer coverage are likely to get minimal benets rom the current tax subsidytoo.
10 A summary o the provisions is provided by the Kaiser Family Foundation athttp://www.k.org/healthreorm/8061.cm, and a timeline o implementationsummary is provided at http://www.k.org/healthreorm/8060.cm.
11 All individuals without oers o employer insurance are allowed to purchasenear-community rated coverage rom the exchanges regardless o whether theyqualiy or subsidies or not. These coverage expansions are expected to alleviatesome long-standing concerns regarding employer provided health insurance.Employers and employees stand to benet rom reduced “job lock”—the needor employees to stay with one company because they can not aord to losetheir health insurance-- when health insurance availability outside o employerarrangements improve. A related benet is a reduction in risk that employeesace during periods in between jobs.
12 The Congressional Budget Oce orecasts that employers would still coverabout ve sixths o the total non-elderly health insurance market ater reorm,using the November 2009 version o the legislation. An Analysis o Health Insur-ance Premiums Under the Patient Protection and Aordable Care Act. Letterrom Doug Elmendor to Evan Bayh, November 30, 2009, available at http://www.cbo.gov/tpdocs/107xx/doc10781/11-30-Premiums.pd .
13 Letter rom Doug Elmendor to Nancy Pelosi, March 20, 2010, available at http://www.cbo.gov/doc.cm?index=11379.
14 Note that employers with workers who take advantage o the Medicaidexpansion are not penalized; this “anti-crowd-out” eature that was part o dratlegislation is not included in the nal version. However, i at least one FTE takesa subsidy, the ne is paid on all FTEs minus 30.
15 The rm size threshold and the nes are both higher than in the Massachusettsreorm enacted in 2006 (which used 11 workers as the threshold or dening alarge rm and $295 per ull time employee as the ne). See http://www.mass.gov/legis/summary.pd or a summary o the provisions.
16 See ootnote 6 and related discussion.
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17 Larry Summers, “Some Simple Economics o Mandated Benets,” AmericanEconomic Review 79 (2) (1989):177-183.
18 Agency or Healthcare Research and Quality, “Table I.A.2.c(2008) Percent o private-sector establishments that oer health insurance that oer at least onehealth insurance plan that required no contribution rom the employee oramily coverage by rm size and selected characteristics: United States, 2008,”available at http://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/national/series_1/2008/tia2c.htm.
19 Agency or Healthcare Research and Quality, “Table I.B.3.b.(2)(2008) Percento private-sector ull-time employees that are enrolled in health i nsurance atestablishments that oer health insurance by rm size and selected character-
istics: United States, 2008,”available at http://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/national/series_1/2008/tib3b2.htm Low wagedened at more than 50% o employees earning at or below $11/hr in 2008.
20 Among large, low-wage employers who oer coverage, 76.8 percent o FTEswere eligible or health insurance. Agency or Healthcare Research and Quality,“Table I.B.3.b.(1)(2008) Percent o private-sector ull-time employees eligibleor health insurance at establishments that oer health insurance by rm sizeand selected charac teristics: United States, 2008,” available at http://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/national/series_1/2008/tib3b1.htm.
21 Katherine Baicker, “Focus on ‘Pay or Play’ Mandates in Health Insurance Reorm,”Risk Management and Insurance Review 11(1) (2008): 49-50.
22 Katherine Baicker, and H. Levy, “Employer Health Insurance Mandates and theRisk o Unemployment,” Risk Management and Insurance Review 11 (1) (2008):109-132.
23 Bernstein, J. and E. Gold, “Comments on Employer Health Insurance Mandates
and the Risk o Unemployment” Risk Management and Insurance Review 11 (1)(2008): 133-139.
24 Agency or Healthcare Research and Quality, “Table I.A.2(2008) Percent o private-sector establishments that oer health insurance by rm size andselected characteristics: United States, 2008,” available at http://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/national/series_1/2008/tia2.htm.
25 Roger Feldman and others, “The Eects o Premiums on the Small Firm’sDecision to Oer Health Insurance,” Journal o Human Resources 32 (4) (1997):635-658.
26 Kaiser Family Foundation and Health Research & Educational Trust, “EmployerHealth Benets 2009 Annual Survey” (2009).
27 Jonathan Gruber and Michael Lettau, “How elastic is the rm’s demand orhealth insurance?” Journal o Public Economics 88 (7-8) (2004): 1273-1293.
28 Sharon K. Long and Karen Stokley, “Massachusetts Health Reorm: EmployerCoverage rom Employees’ Perspective,” Health Aairs Web Exclusive, 28 (6):
w1079.
29 Large employers are generally not experience-rated, because their health carecost averages tend to be predictable rom year to year. Underw riting practicesin the non-group market, which is subject to a larger degree o cost variabilityand adverse selection, include denying coverage based on pre-existence o certain medical conditions, use o experience rating in setting premiums,and rescission o coverage (which was banned in the 1997 Health InsurancePortability and Accountability Act). All o these practices are banned underthe PPACA. For recent data on rescission, see http://www.naic.org/documents/committees_b_regulatory_ramework_rescission_data_call_report.pd.
30 Mark Pauly, “Avoiding Side Eects In Implementing Health Insurance Reorm,”New England Journal o Medicine 362 (8) (2010): 671-673.
31 Simon, K. “What Have We Learned From Research on Small-group InsuranceReorms?” in Alan C Monheit and Joel Cantor eds. State Health Insurance MarketReorm (New York: Routledge, 2004).
32 Losasso, A. and I. Lurie. “Community Rating and the Market or Private Non-
group Health Insurance,” Journal o Public Economics 93 (1-2) (2009): 264-279.
33 However, it is unclear how Medicaid covered workers are treated in the calcula-tion o nes or rms that have at least one worker receiving subsidies in theexchange.
34 Congressional Budget Oce, “The State Children’s Health Insurance Program”(2007), available at http://www.cbo.gov/tpdocs/80xx/doc8092/05-10-SCHIP.pd.
35 Author’s calculations based on Current Population Survey or March 2009.
36 Melinda Beeuwkes Buntin and David Cutler, “The Two Trillion Dollar Solution:Saving money by modernizing the health care system” (Washington: Centeror American Progress, 2009), available at http://www.americanprogress.org/issues/2009/06/pd/2trillion_solution.pd.
37 Letter rom Doug Elmendor to Evan Bayh, November 30, 2009.
38 The history o the employer health insurance system is documented by standardhealth economics text authors such as Sherman Folland, Allen C. Goodman,and Miron Stano, The Economics o Health and Health Care, 5th Edition (NewYork: Prentice Hall, 2006). and in Janet Currie and Brigitte Madrian, “Health,
Health Insurance, and the Labor Market,” in Orly Ashenelter and David Card,eds., Handbook o Labor Economics, Edition 1, Volume 3 (Mar yland Heights, MO:Elsevier, 1999).
39 E.g. Internal Revenue Service, 2010. Employer’s Tax Guide to Fringe Benets in2010. Available at http://www.irs.gov/pub/irs-pd/p15b.pd
40 Gerald Goldstein and Mark Pauly. “Group Health Insurance as a Local PublicGood.” In Richard Rosett, ed., The Role o Health Insurance in the Health Ser vicesSector (Cambridge, MA: National Bureau o Economic Research, 1974).
41 Michael Collins. “A Primer on the Sel-Insured Health Plan NondiscriminationRules,” Journal o Pension Planning and Compliance 25 (2) (1999): 1-15. Collinsexplains that since 1978, except or the period 1986 to 1989, the nondiscrimina-tion statues applied only to sel-insured rms. From 1986 to 1989 it applied tosel-insured and commercially insured plans alike.
42 Phillip Cooper, Kosali Simon, and Jessica Vistnes, “A Closer Look at the ManagedCare Backlash,” Medical Care 44 (5) (2006): 1-11.
43 In thinking about the generosity o the health insurance contract, rather thanjust thinking o the dollars to be spent on a policy, one can think o it as being avariable k(x), which is the raction o medical expenses that will be covered bythe policy. The choice o k will depend on characteristics x like age o workers,income and education. Under perect sorting o workers, the workers will behomogenous within a rm, thus “x” s will all be the same within the rm.
44 Goldstein and Pauly make a distinction between an employer decision versusa union decision. In the end, both are refecting preerences o workers, but itcould be that the workers whose voice is heard the most is dierent. This is atheme echoed in later work on unions (Freeman and Medo, 1984), that unionsrefect the voice o older more established workers while the employer wouldotherwise cater to the wishes o the employees who are most likely to leave i their wishes are not met-younger, less established workers. This also means thatas retiree health insurance in particular has become very expensive, unions mayconcentrate more o their eorts in that area rather than health insurance orthe non-elderly given the age prole o union voices.
45 Other work in this area include M. Kate Bundor, “Employee demand or healthinsurance and employer health plan choices,” Journal o Health Economics 21 (1)(2002): 65-88.
46 Jon R. Gabel, Heidi Whitmore, Jeremy Pickrin, Christine C. Ferguson, Anjali Jain,Shova KC and Hilary Scherer, “Obesity in the Workplace: Current Programs andAttitudes among Employers and Employees,” Health Aairs, 28(1) (2009): 45-56.
47 Sean Nicholson, Mark V. Pauly, Daniel Polsky, Catherine M. Baase, Gary M. Billotti,Ronald J. Ozminkowski, Marc L. Berger and Claire E. Sharda, “How to Present theBusiness Case or Helathcare Quality to Employers,” Applied Health Economicsand Health Policy, 4(4) (2005): 209-218.
48 Early papers on the compensating wage dierential or health insurance arereviewed in Kosali Simon, “Displaced Workers and Employer-Provided HealthInsurance: Evidence o a Wage/Fringe Benet Tradeo?” International Journal o Health Care Finance and Economics 1 (3-4) (2001): 249-271.
49 Paul B. Ginsburg. “High and Rising Health Care Costs” (Princeton: Robert WoodJohnson Foundation, 2008), available at http://www.rwj.org/pr/product.jsp?id=35368#content.
50 Craig Olson, “Do Workers Accept Lower Wages in Exchange or Health Benets?”
Journal o Labor Economics 20 (2) (2002): 91-114.
51 Jonathan Gruber, “The Incidence o Mandated Maternity Benets,” AmericanEconomic Review 84 (3) (1994): 622-641; Louise Sheiner, “Health Care Costs,Wages, and Aging” (Washington: The Federal Reserve, 1999); Other work inthis area includes A nne B. Royalty, “Estimating workers’ marginal valuation o employer health benets: Would insured workers preer more health insuranceor higher wages?” Journal o Health Economics 27 (1) (2008): 89-105, available athttp://ssrn.com/abstract=165530.
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35 Center or American Progress | Implications o Health Care Reorm or Employers
52 Brigitte Madrian, “Employment-Based Health Insurance and Job Mobility: IsThere Evidence o Job-Lock? “ The Quarterly Journal o Economics 109 (1)(1994): 27-54; Jonathan Gruber and Brigitte Madrian, “Health Insurance and JobMobility: The Eects o Public Policy on Job-Lock,” Industrial and Labor RelationsReview 48 (1) (1994): 86-102.
53 Kanika Kapur, “The Impact o Health on Job Mobility: A Measure o Job Lock,”Industrial and Labor Relations Review 51 (2) (1998): 282-219.
54 David M. Blau and Donna B. Gilleskie, “Retiree Health Inusrnace and the LaborForce Behavior o Older Men i n the 1990s,” The Review o Economics and Statis-tics, 83(1) (2001): 64-80.
55 There is a literature that shows productivity eects o better health (R. Kesslerand P. Stang (ed) 2006. Health and Work Productivity. Chicago. University o Chicago Press.) For a review o papers on whether health insurance increasesproductivity, see E. O’Brien. 2003. “Employer Benets rom Workers’ HealthInsurance”. The Milbank Quarterly. Vol 81 (1)pp.5-43. Employers may try to elicitinormation about workers by oering health insurance even absent any otherbenet to the rm (see theory by A. Marino and J. Zabojnik, 2008.”A Rent Extrac-tion View o Employee Discounts and Benets”. Journal o Labor Economics, vol26 (3). Pp.486-518)
56 R. Topel and M. Ward, “Job Mobility and Careers o Young Men,” Quarte rly Journalo Economics 107 (2) (2002): 439-479.
57 Roger Feldman and others, “The Eect o Premiums on the Small Firm’s Decisionto Oer Health Insurance,” Journal o Human Resources 32 (4) (1994): 635-658;Jon Gabel and Gail Jensen, “The Price o State Mandated Benets,” Inquiry 26 (4)(1989): 419-431; Kosali Simon, “Adverse Selection in Health Insurance Markets:Evidence rom State Small-Group Health Insurance Reorms,” Journal o PublicEconomics 89 (9-10) (2005): 1865-1877.
58 Economic Research Initiative on the Uninsured “On my mind: Conversations withEconomists. Simon: Nation’s Big Uninsurance Problem Revolves Around SmallFirms” (2008), available at http://eriu.sph.umich.edu/orthemedia/conversations.html.
59 Kaiser Family Foundation and Health Research & Educational Trust, “EmployerHealth Benets 2007 Annual Survey” (2007), available at http://www.k.org/insurance/7672/.
60 Senate Health, Education, Labor and Pensions Committee, Increasing HealthCosts Facing Small Businesses, 111th Cong., 1st sess., 2009. http://help.senate.gov/Hearings/2009_11_03/2009_11_03.htmlAccessed January 2010.
61 J.M. Abraham, T. Deleire, and A. Beeson Royalty, “Access to Health Insuranceat Small Establishments: What Can We Learn rom Analyzing Other FringeBenets?” Inquiry 46(3) (2009): 253-73.
62 Kaiser Family Foundation and Health Research & Educational Trust, “EmployerHealth Benets 2007 Annual Sur vey.”
63 Nationally, about 31 percent o part-time employees are eligible or health
insurance, in rms that oer health insurance. Agency or Healthcare Researchand Quality, “Table I.B.4.b.(1),” available at http://www.meps.ahrq.gov/mep-sweb/data_stats/summ_tables/insr/national/series_1/2006/tib4b1.htm.
64 Michael Collins, “A Primer on the Sel-Insured Health Plan NondiscriminationRules,” Journal o Pension Planning and Compliance 25 (2) (1999): 1-15.
65 As an example, employers are legally able to treat retirees under 65 dierentlyin health insurance than retirees over age 65 because o Medicare eligibility at65, a move or which employers needed EEOC approval since it would otherwisehave violated age discrimination laws. (see Blue Cross Blue Shield Association.“EEOC Allows Health Benets Shit at 65” (2007), avalilable at http://www.bcbs.com/news/national/eeoc-allows-health-benets-shit-at-65.html.)
66 See, or example, Mark A. Hall and Stephen S. Rich, “Laws Restricting HealthInsurers’ Use o Genetic Inormation: Impact on Genetic Discrimination,” Ameri-can Journal o Human Genetics 66 (1) (2000): 293–307.
67 For data on which states enacted which types o mandates, see Health PolicyTracking Service, “Major Health Care Policies, 50 State Proles” (Various years)
and Victoria Craig Bunce, JP. Wieske, and Vlatsa Prikazsky, “Health InsuranceMandates in The States in 2007” (Alexandria, VA: The Council or AordableHealth Insurance, 2007)
68 Phillip Cooper, Kosali Simon, and Jessica Vistnes, “A Closer Look at the ManagedCare Backlash,” Medical Care 44 (5) (2006): 1-11.
69 Kaiser Family Foundation and Health Research & Educational Trust, “EmployerHealth Benets 2009 Annual Survey” (2009), available at http://ehbs.k.org/?CFID=583758&CFTOKEN=74705268&jsessionid=6030796b705a8246ec732b3b81a73673a4a4.
70 Phillip Cooper, Jessica Vistnes and Gregory Vistnes, “Employer ContributionMethods and Health Insurance Premiums: Does Managed Competition Work?”The International Journal o Health Care Finance and Economics 1 (2) (2001):159-187.
71 U.S. Census Bureau, “Household Income Rises, Poverty Rate Unchanged, Numbero Uninsured Down,” Press release, August 26, 2008, available at http://www.census.gov/Press-Release/www/releases/archives/income_wealth/012528.html. Note that this number does not dierentiate between those who have versusdo not have employer provided amily health insurance. The median amily inthe US is oered health insurance rom an employer who pays on average 73percent o the cost o the health insurance policy, thus the median amily is pay-ing only about $3,267 (6.5 percent) out o their amily income as the employee
portion o health insurance.
72 David Helms, Anne Gauthier, and Daniel Campion, “Mending the faws in thesmall group market,” Health Aairs 11 (2) (1992): 7-40.
73 Jonathan Gruber and Michael Lettau, “How elastic is the rm’s demand orhealth insurance?” Journal o Public Economics 88 (7-8) (2004): 1273-1293.
Jonathan Gruber and Ebonya Washington, “Subsidies to employee health insur-ance premiums and the health insurance market,” Journal o Health Economics24 (2) (2005): 253-276.
74 Katherine Baicker and Amitabh Chandra, “The Labor Market Eects o RisingHealth Insurance Premiums,” Journal o Labor Economics. 24 (3) (2006): 609-634.
75 David M. Cutler and Brigitte C. Madrian, “Labor Market Responses to RisingHealth Insurance Costs: Evidence on Hours Worked,” The RAND Journal o Economics 29 (3) (1998): 509-530.
76 Jonathan Gruber, “State-Mandated Benets and Employer-Provided Health
Insurance,” Journal o Public Economics 55 (3) (1994): 433-64.
77 Agency or Healthcare Research and Quality, “Medical Expenditure Panel Survey(MEPs)” (2009), available at http://www.meps.ahrq.gov/mepsweb/data_stats/MEPSnetIC.jsp.
78 Accessed online September 2008. http://prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/04-22-2008/0004797216&EDATE=
79 Ron Z. Goetzel and others, “The Health and Productivity Cost Burden o the ‘Top10’ Physical and Mental Health Conditions Aecting Six Large U.S. Employers in1999,” Journal o Occupational and Environmental Medicine 45 (1) (2003): 5-14
Ron Z. Goetzel and R.J. Ozminkowski, “The health and cost benets o work site health-promotion programs,” Annual Review o Public Health 29 (2008):303-323.
Ron Z. Goetzel and others, “Health, Absence, Disability, and Presenteeism:Cost Estimates o Certain Physical and Mental Health Conditions Aecting U.S.Employers,” Journal o Occupational & Environmental Medicine 46 (4) (2004):398-412.
Ron Z. Goetzel and others, “The Relationship Between Modiable Health Risksand Health Care Expenditures: An Analysis o the Multi-Employer HERO HealthRisk and Cost Database,” Journal o Occupational & Environmental Medicine 40(10) (1998): 843-854.
80 Kenneth Pelletier, “A Review and Analysis o the Health and Cost-eectiveOutcome Studies o Comprehensive Health Promotion and Disease PreventionPrograms at the Worksite: 1993-1995 update,” American Journal o HealthPromotion 10 (5) (1996): 380-388.
Kenneth Pelletier, “A Review and Analysis o the Clinical and Cost-eectivenessStudies o Comprehensive Health Promotion and Disease ManagementPrograms at the Worksite: 1995-1998 update (IV),” American Journal o HealthPromotion 13 (6) (1999): 333-345, iii.
Kenneth Pelletier, “A Review and Analysis o the Clinical and Cost-eectivenessStudies o Comprehensive Health Promotion and Disease ManagementPrograms at the Worksite: 1998-2000 update,” American Journal o HealthPromotion 16 (2) (2001): 107-116.
Kenneth Pelletier, “A Review and Analysis o the Clinical and Cost-eectivenessStudies o Comprehensive Health Promotion and Disease ManagementPrograms at the Worksite: update VI 2000-2004,” Journal o Occupational andEnvironmental Medicine 47 (10) (2005): 1051-1058.
81 Ron Loeppke and others, “The Impact o an Integrated Population Health En-hancement and Disease Management Program on Employee Health Risk, HealthConditions and Productivity.” Working paper (Ithaca: Cornell University, 2008).
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36 Center or American Progress | Implications o Health Care Reorm or Employers
82 Robert S. Galvin and others , “Has The Leaprog Group Had An Impact OnThe Health Care Market?” Health Afairs 24 (1) (2005): 228-233.
83 Employee Benet Research Institute, “History o Health Insurance Ben-ets” (2002), available at http://www.ebri.org/publications/acts/index.cm?a=0302act.
84 Jon B. Christianson, Paul B. Ginsburg, and Debra A. Draper. 2008. “The TransitionFrom Managed Care To Consumerism: A Community-Level Status Report,” HealthAairs 27 (5) (2008): 1362-1370.
85 United Benet Advisors (an employee benet advisory rm) Health Plan Surveysurveys over 18,000 health plans o 12,860 employers, shows that 11.2 percent
i employees nationwide are enrolled in CDHPs in 2008 (a doubling rom2007), and that 13 percent o all plans oered by employers now are CDHPs, anincrease o more than 40 percent rom 2007. About 63 percent o employees arein PPOs, and about 13 percent in HMOs. Available at http://unitedbenetadvi-sors.com/.
86 Melinda Beeuwkes Buntin and others, “Consumer-Directed Health Care:Early Evidence About Eects On Cost And Quality,” Health Aairs 25 (6) (2006):w516-w530.
87 Jessica Greene and others, “The Impact O Consumer-Directed Health Plans OnPrescription Drug Use,” Health Aairs 27 (4) (2008): 1111-1119.
88 John W. Rowe and others, “The Eect O Consumer-Directed Health Plans OnThe Use O Preventive And Chronic Illness Services,” Health Aairs 27 (1) (2008):113-120.
89 David K. Dranove, Kathryn Spier, and L. Baker. 2000. “Competition’ among em-ployers oering health insurance,” Journal o Health Economics 19(1): 121-140.
90 Employers were allowed to deduct the entire costs rom taxes (including thepart paid by the government), a provision that the current law reversed.
91 Jon R. Gabel, Heidi Whitmore, Jeremy Pickreign, Will Sellheim, KC Shova, andValerie Bassett, “Ater The Mandates: Massachusetts Employers Continue ToSupport Health Reorm As More Firms Oer Coverage,” Health Afairs, 27(6)
(2008), w566-w575.
92 Kosali Simon and W. White. “Inorming Health Care Reorm Options or New York State.” Working paper (Ithaca: Cornell University, 2008).
93 Caliornia Healthcare Foundation. “Employer Opinions about Responsibilityor Health Coverage” (2007), available at http://calhealthreorm.org/content/view/62.
94 Agency or Healthcare Research and Quality, “Table I.B.1(2008) Number o private-sector employees by rm size and selected characteristics: UnitedStates, 2008,” available at http://www.meps.ahrq.gov/mepsweb/data_stats/summ_tables/insr/national/series_1/2008/tib1.pd
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37 Center or American Progress | Implications o Health Care Reorm or Employers
About the author
Kosali Simon is an associae proessor in he Deparmen o Policy Analysis and
Managemen a Cornell Universiy, and a research associae o he Naional Bureau o
Economic Analysis.
Acknowledgements
Te auhor hanks (in alphabeical order) Kae Bundor, ichard Burkhauser, Karen
Davenpor, Brad Herring and Ed Paisley or helpul commens. Financial suppor rom
he Cener or American Progress is graeully acknowledged. All errors and opinions are
my own. Tis work does no necessarily reec he opinions o Cornell Universiy or he
Cener or American Progress.
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