9 2 4T32b 8 ASSURING ECONOMIC SECURITY FOR WORKERS: 18 519 3II 2_ I0 6 20 23 21 22 16 17 14 12 15 13 LISTING OF TABLES HEALTH, DISABILITY, AND LIFE INSURANCE BENEFITS Table 4 .' TABLE Table OF CONTENTS 3 "-' Table 2 "' Table 6 "' their coverage from an employer group health insurance plan. In 9982, percent) were covered by an employer group health insurance plan ('see Table low- proportionately level;andasmiddle-income a percent largerof families, real income, income people employer-provided supplement with thethan lowest health theyincomes dobenefits' for wou'id higher-income probably pay more are inversely related to income, the integration of public program benefits se benefits,value offers of improved a rough idea coverage of the to potential all workers. Table public 5To cost maximize that employee might beparticipation " dismemberment; in cases of accidental dismemberment, E,B,disability °Io iN'presumed. disability disability insurance insurance plan is towere provide guaranteed earningslong-term replacement disability for workers benefits, who become after compensation Title all states, Employer recipients plans contributions is nearly of AFDCuniversal. benefits to Statement life I0 insurance However, areofcategorically these valued plans at less eligible pay than benefits for $50,000 Page employer plan are uninsured from anyTable source. I These people living'in worker years. These proposals have differed in the populations they sought to serve, workers and their dependents in the absence of tax preferences fo_ employer DISTRIBUTION OF PERSONS Library DISTRIBUTION OF WORKERS Deborah J. Chollet, Ph.D. DISTRIBUTION OF NONELDERLY PERSONS employer plans provided PERCENT health OF FULL-TIME insuranceEMPLOYEES coverage PARTICIPATING to 80 percent of the total 2). workers. Most of these people (77 percent of covered nonworkers) were children than six times the amount of additional tax paid by people with income above probably substantially in the plan, raisesand raise the to rates value enhanceof of the employer-provided private plan'shealth cost-efficiency, insurance disability coverage however, insurance throughout employee coveragethe ociated with an essentially public system of disability and life DISTRIBUTION OF PERSONS WITH PRIVATE HEALTH INSURANCE In 1982, nearly COVERED all full-time BY AN EMPLOYER workers (99 GROUPpercent) HEALTH who INSURANCE participated PLAN in an only integration, permanently for work-related and of 50 totally to disability. 60 disabled. percent ofThese Long-term pre-disability apparent disability gaps earnings, incoverage public subject insurance can to be are Table Medicaid; the families also kinds I: tax-exempt. furthermore, Distribution without of health COVERED employer 14care BY of in InAN Workers some expenses general, coverage EMPLOYER states, Covered they distributions represent GROUP dependent would byHEALTH ancover, most Employer children from INSURANCE ofand the life their in uninsured insurance PLAN anymethod low-income population plans of DISTRIBUTION OF WORKERS COVERED BY AN EMPLOYER GROUP Section COVERED BY EMPLOYER GROUP HEALTH INSURANCE PLANS, page contributions IN EMPLOYERto HEALTH, coverage LONG-TERM suggests DISABILITY, that the rateANDofLIFE private INSURANCE health PLANS, insurance OR PUBLIC PROGRAM ELIGIBILITY 5 BY FAMILY INCOME, 1982 a 13 Group Health Insurance BY PERSONAL Plan by EARNINGS, Level of1982 Workforce a HEALTH INSURANCE PLAN BY WORKER BY LEVEL STATUS, OF WORKFORCE 1982 a ACTIVITY, 1982 a MEDIUM-SIZE AND LARGE ESTABLISHMENTS, 1982 a under population age Most 18; thatworkers thereported rest covered Were private nonworking by insurance an employer adults, coverage group including health from any aplan small source. arenumber low-These of and relative $50,000. to predisability earnings among higher-wage workers. nonelderly contributionspopulation. to the planResearch are generally conductedkeptby low. the Employee Benefit Research urance. It is likely that the additional cost of such a system would be BY EMPLOYER HEALTH INSURANCE COVERAGE, 1982 a maximum payment limits or ceilings on disability income. are program employer pro invided exempt the coverage United group through from life individual States. suggest an insurance insurance that income plan employer-provided policy, taxation wereorentitled through as well. disability to theextended Neither worker's andemployer coverage pension life insurance or plan. family are categorically eligible for Medicaid. II The loss of employer financing Mr. Activity, health Chairman, care. 1982I................................................. Last am pleased year, the to submit Congressthisconsidered testimony legislation on the importance that 3 I. Employer-Provided Health Benefits .................................... 1 coverage among the working population might be significantly lower--and the ASSURING ECONOMIC SECURITY FOR WORKERS: Number of A. Coverage ........................................................ 2 retirees people middle-income include under workers. workers age 65. and In their 1982, families more than at80all percent levelsofofallearnings workers and covered income. D. Efficiency of Tax Preferences: What are the Alternatives?-- Institute (EBRI) and others indicates that income is an important determinant Integration Greater participation of public program in employer benefits healthin insurance private disability plans has plans, also greater than the level of tax expenditures associated with current tax B. Employer-Provided PersonsLife withInsurance--Nearly Percent all of full-time Percent employeesof distribution of the policy's face value if they became disabled. Nearly contributions plans coverage In 1982, are among about the primary tolow-income 43disability percent sourceworkers, oforof full-time life disability therefore, insurance workers and (under could life in medium-size insurance impose $50,000), significant coverage and nor large the for costs Table 2: Distribution HEALTH, of Workers DIS Nonelderly ABILITY, with AN Persons D LIFE CIovered NSURANCEby BENEFITS Employer Percent of would provide B. Most Tax Incentives basic of thehealth workers .................................................. insurance who are for covered peopleby who an employer lose employer health coverage insurance 4 as of employee benefitsPersons to thewith economic Employer security Coverage Percentof of workers andPercent their No families. of rate of Medicaid coverage significantly higher--were low-income employees Participants as a Percent Persons with Employer Persons without Employer Employer Persons All Persons Group Health Insurance Plans, by Worker Status, 1982 ........... 5 Workforce Employer Direct Percent Indirect of Employer All Workers C. A. B. Equity Tax CoveraEe--Health Incentives--High .......................................................... Coverage insurance rates of is worker the Persons mostparticipation common employee All inPersons employer benefit 6 Employee by Proposals an employer Benefit to revise group Plan or health eliminate insurance tax preferences plan earned for lessemployer than $30,000; group health and more of individual health insurance purchase among people without access to however, been encouraged have at byleast the two rising additional cost of effects. individual First, coverage. the integration As preferredof DI ferences for employer-provided plans. in medium-sized and large establishments participate in an employer-sponsored three-quarters large establishments numbers ofparticipated (7workers. 2 percent) Coverage had in an coverage employerthat group provided disability accidental Coverage plan; death 49 percent or benefits on state ultimately Medicaid programs. paid byCoverage these Potential plans, increases are taxable within in existing by Socialpublic Security. with program Employer a result of unemployment. All of these proposals failed in Congress because plan are low- and middle-income Coverage workers. b In Workers 1982, within more than half with ofEmployer all Worker The taxStatus preferences D. Efficiency(in accorded of millions) Tax particular Preferences:with kinds What Coverage ofAre employee the Alternatives? benefits--pensions, with Coverage ..... II of Activity required All Full-Time to pay Employees the full Totalcost of Coverage health insurance b Coverage for themselves b Coverage and their Table Family 3:Income Distribution of(in Workers millions) Covered by Income an Employer Group Group Coverage Personal Earnings (in millions) Earnings Group Coverage E. Summary and Concluding Remarks ................................. 13 provided than one_ to workers earnedinless the United than $15,000 States. (seeIn Table 1982, 3). 84 million Only 5 pe civilian rcent of all group insurance healthhaveplans come isfrom encouraged several by quarters. both the The tax Administration code and the way hasthat proposed group a and coverage health otherinsurance from public an disability employer; risks (prime-age iftransfers employers working maydidrationalize adults not provide and their thehealth assistance dependents) coverage, provided have most Whether a revision of tax preferences for employer-provided plans dismemberment benefits. Number of Percent of All Number of Percent of All basic life insurance plan. Like disability Statement insurance, of basic life insurance costs, andThe Despite thelevel potential coverage of foregone for by employer significantly federal disability revenues, higher plans orrates tax , Social expenditures, of noncoverage Security, in participatedHealth in aInsurance pension plan Plan that by Personal would provide Earnings, immediate 1982 ............... retirement 8 workers with employer health insurance coverage earned less than $15,000; 88 health their projected insurance, public disability cost insurance was prohibitive. and life Even insurance--have so, most proposals been for a dependents. 8 Other Source Persons Persons with Persons 3Persons without Deborah J. Chollet, Ph.D.* (Persons in millions) All health nonagricultural II. Persons Employer insurance b -Provided workers is priced. 130.8 reported Disability Employer coverage andcontributions Lifefrom 67.5 Insurance an employer toBenefits health group insurance ............ I00.0 health have 16 Health workers Insurance covered by foranEmployee employerb group health insurance plan 97 in 1982 earned more low-income cap on the workers tax exemption would not of employer purchase contributions private health toinsurance. health insurance, Economicboth been absorbed into employer group plans, the cost of individual private health id jeopardize by independent private insurance public disability coverage isprograms. an importantIntegration issue in of public assistance associated benefits workers' benefits Loss Lacking are compensation ifwith the generally worker the population exemption and became intended other sur 0 of disabled 1vey disability-related toemployer provide data,(see the contributions income Table importance 5.5to 6). public replace In to ofplans tot accident employer-provided alost l,most about earnings. and 0.I people 92 worker of Coverage families, are(millions) important Employer considerations Coveragein the(millions) debate overEmployer reducing Coverage tax Loss Table 4: Distribution of Persons 0.4 Covered by an Employer 43.4 Group 0.5 national percent of health all coinsurance vered workers plan--including earned lessboth thanmajor $25,000. proposals This to distribution provide of instrumental A. Long-Term in achieving Disability broad Insurance participation ................................. among workers and important 16 Noncontributory The central eposition of employer-provided plans71 in our system of $ I-$ 4 999 Before the United 1 3 States House of 9.2Representatives 1.0 Health Insurance Plan by Family Income, 1982 ................... 9 $ I-$ 4 999 15.2 56.2 18.2 Workers All insurance workers cB.plan. Employer-Provided These 83.7 83.7 workers Life represented Insurance 65 3 nearly 77.6 ............................... 7818.4 percent of the 64.0 24.2 nation's20 been statutorily exempt from individual income and Social Security taxation to thanraise $40,000. revenue and to discourage generous health insurance benefits in research insurance has coverage consistently has risen. found Recent that the changes lack of in health the taxinsurance code have poses further a sidering revised payments taxassures preferences a more for uniform these lebenefits. vel of earnings In terms replacement of potential for all workers, The5 amount 000- 7of499basic coverage 2provided 1 by employer 21.2plans, therefore, is 1.6usually who coverage reportasbeing a source severely of life disabled--that insurance coverage is, unable for to workers work at andall their or families disability percent preferences of insurance all for full-time employer is estimated workers contributions Committee have at on $120 disability to Ways million health and Means insurance. coverage in 1984. provided Tax expenditures by an health 5 000- insurance 7 499 to the unemployed--rely 6.6 on employer 65.9 health insurance 7.9 plans as economic covered C.security workers Efficiency byforearnings of workers Tax Preferences: is andmirrored their families. inWhat the Are distribution,of This the Alternatives? was the purpose all people ..... for21 Full-time workers 65.1 58 3 6.8 11.8 health insurance is illustrated by the low rates of alternative health Health Insurance for Dependents b 93 All Persons 130.8 I00.0 62.9 I00.0 7 500- 9 999 3 4 36.4 2.6 Table 5: Distribution ofSubcommittee Persons with onPrivate Social Health SecurityInsurance 7 500- 9 999 6.6 74.8 7.9 D. Summary ........................................................ 25 Nonworkers total Full-year civilian nonagricultural 49.4 47.1 workforce 46 1 (see 54.9Table I). 3.3 36.05.3 since 1954. Noncontributory The These common exemptions allegation have that encouraged employer health worker insurance demand 44 forprimarily employer plans. The most recent Advisory Council on Social Security also reducing significant reinforced thethe barrier higher attractiveness rate to health of earnings care of employer access replacement among plan participation low- from and DI middle-income amongrelative low-wage to the _rage loss, the arguments against revising or eliminating tax preferences aregularly isi0 multiple difficult 000- 14 because of999 totheevaluate. of worker's a chronic Certainly, earnings. 12 2health In the condition 1982, wide 56.2 about participation or impairment--report two-thirdsby of full-time plan 9.3 no associated insurance or with pension the exemption plan. of employer contributions to group term life are or Public Program Eligibility by Employer Health I0 covered 000- 14 by 999 an employer plan 15.8 by family income. More 85.1 than half of all18.9 which the Children primary Congressprogranted viders 40.4 tax of health preferences insurance. for 6_.2 these benefits and legisl 27.6ated Part-year 15.8 12 3 3.5 6.5 insurance coverage--private or public--reported by the nonelderly population Other Private 15 000- 19 999 14 8 68.2 11.3 4 Hearing on 15 000- 19Insurance 999 Coverage, 12.7 1982 ...................................... 90.4 15.214 Part-time Others Rates workersof employer 13.6 II.0 group 15 health4 1insurance 37.7 coverage 9.5 are particularly 8.48.1 employer-provided Long-Term benefits advocated high-income Disability a tax cap, health Insurance workers suggesting insurance is not thatatsupported Congress all incomeby earmark national levels.part 43 population Inofaddition, the general survey the workers. families. purchase of individual coverage. While employer contributions to health employer-provided disability and life insurance plans may be weaker than workers income from in medium-size any private and or public large employer disabilityplans plan. suggests The 1978 thatDisability these plansSurvey are participants 20 000- Since 24 999 inearnings medium-sized replacement The17.8 and Distributi large isonestablishments the and goalEconomics 78.2 of disability belonged insurance to plans 13.6 that higher: II.CovEmployer-Pro erage$2.2 billion vided 7.8 Disability in 1984. and Life 5.9 Insurance Benefits 16.1 25.6 20 000- 24 999 9.6 92.8 ll.4 nondiscrimin people- workers aThe tionlevel and rules oftheir tax for expenditures dependents--covered qualifying plans. associated Today, by an with employer most the workers taxplan exemption participate in 1982of Full-year Noncontributory 5.1 2 1 3.0 33 2.5 without coverage from an employer plan. Only 26 percent of all people living 25 000- 29 999 17.3 83.9 13.2 Table 6: Percent of Full-Time of Employer-Provided Employees Participating Fringe Benefits in Employer 25 000- 29 999 6.3 93.9 7.6 high among workers who are employed full-time throughout the year, the largest Social data. Part-year Security Rates of worker tax exemption coverage 8.5 hasbyprovided employer 1 9 aplans financial are6.5high incentive and stable for5.6employers at all revenue from the new tax to Medicare's Hospital Insurance trust fund. Those Secondly, integration avoids "excessive" cumulative earnings insurance Second, remain the tax-exempt, income distribution the 1982 TaxofEquity people and with Fiscal employer Responsibility coverage Act arguments against taxing employer-provided health insurance benefits. At apaid conducted 30 major 000- I00 source For percent 34 by 999 most theofSocial orworkers life 200 insurance Security percent and 15.0their of Administration coverage the families, deceased amongpublic 86.3 workers. worker's found disability thatannual Furthermore, only 42 earnings. assistance percent 11.4 One and of coverage, Any Public Employer the contribution group disability amounts and (fromlife either insurance the employer plans provide or employee) income and September 17 and 18, 1984 30 000- 34Health, 999 Long-Term Disability, 3.9 and Life 93.3 Insurance Plans, 4.6 SOURCE: inemployer reported pension EBRIcontributions family andtabulations insurance income to less of plans health thethan thr March oinsurance ugh $30,000. 1983 theirCurrent (estimated The employers. primary Population atalternative They $17.6Survey have billion come source (U.S. to in of Retirement Self-employed in familiespension of civilian with 5.0 immediate nonagricultural2 9 workers without 2.1 employer group 4.3 35 000- 39 999 11.8 86.9 9.1 Coverage 5.3 4.1 18.3 29.1 Medium-Size and Large Establishments, 1982 .................... 18 sector 35 000-of39the999workforce. In 1982, 2.1 more than 90 percent 93.6 of full-time full-year 2.5 to offer health insurance benefits in lieu of wage compensation to workers who levels disability of Department earnings retirement of above Commerce, provision $15,000.Bureau Even ofthough the Census). workers who 49 earned less than who have proposed comprehensive tax reform (for example, the Bradley-Gephardt same time,suggests replacement (TEFRA) the estimates reduced thatfrom a tax tax of independent federal on preferences employer revenue public contributions for loss programs. individual associated toIn insurance health general, with insurance tax purchase, public-program would, wideningin the 40 10.7 000- million 49 999 persons who15.9 reported severe disability 87.0 also reported12.2 receipt although third survivors' the amount of plan employer-provided benefits of participants plan benefits are the basic belonged most vary life important by to employee insurance plansalternative that earnings. ispaid not ato intended Inflat employer-provided 1982, dollar totwo-thirds provide amount, of replacement for workers and their dependents in the event of the worker's 40 000- 49 999 2.1 91.7 2.5 consider coverage these among benefits, workers and and their their dependents tax status,without as partemployer of the same coverage socialwas 1984) 6 may be a very low price to pay for a system of health insurance that Noncontributory d coverage reported coverage from another private health insurance plan in 1982 1 50 000- Medicaid 59 999 1.9 8.3 1.5 87.1 13.6 6.3 21.6 50 000- 59 999 1.0 92.3 1.2 workers were covered by an employer group 16health (Percents) plan. aIncludes earn less than all civilians the Socialexcept Security thoseceiling living onintaxable familieswages. in which In 1983, the nearly bill) $15,000suggest reportedthatsomewh allatemployer lower Fates contributions of employer to health coverageinsurance in 1982,bethe fully number effect, benefits the disparity target (DI, workers' between low and the middle-income compensation, tax treatmentand workers ofa variety employer-based.coverage who constitute of other more cash and than and noncash 80the [erences for employer-provided disability and life insurance benefits are usually adequate 60 000-between life 74 999insurance $2,000 and coverage $15,000. 5.7 for most workers, 86.2 only a _small proportion 4.4 of of disability full-time total public disability or employees andprivate life or with death. insurance disability disability Although plans. benefits. insurance noSeveral population More public-sector planscareful survey.data contributed investigation programs exist to theprovide toplan; of Medicaid. 60 000- 74 999 0.6 89.4 0.7 contract serves more that than assures 60 percent their entitlement of the population. to Social Federal Security spending benefits,for Medicare, Life Insurance 9g greatest (see Table earner 5). isAnother a member29 of percent the Armed reported Forcespublic or anprogram agricultural eligibility, worker. Medicare 0.4 0.3 2.4 3.8 75 000 or more 5.2 84.6 4.0 75 000 or more 0.7 86.9 _ 0.9 All workers Although most 77.6 workers (60 percent) 60.5 have coverage 17.1 from their , 22.5own Noncontributory 82 95 of percent workers of in all that workers earnings earned group less is very than large. the Social As aSecurity result, m_re c_iling. than The half taxed as employee earnings. programs conditioned on disability) are independent and tax-exempt. The percent purchase ofofall individual workers covered coverage.by an employer group plan. _tantially smaller. In addition to providing death benefits for worker's families, so_e this apparent gap in income security for the disabled may be a s%arting point document the prevalence and distribution of life and disability _nsurance income employeessecurity in medium-size benefits comparable and large establishments to private disability elect supplememtal and liPe insurance. group employee contributions The tax exemption for disability of employerinsurance, contributions however,to health were lOw--usuall[ insurance are unemployment by comparison,insurance is estimated and workers at $62.2 compensation billion dollars insurance. in 1984; 1984 bItems may not add to totals because of rounding. predominantly for Medicaid. Nearly half (48 percent) of all people living in CHAMPUS b 3.1 2.4 3.3 4.9 " Total, All Persons b 130.8 67.5 I00.0 Full-time workers 84.7 75.8 8.9 15.3 Total, employerAllplan, Workers dependents' c coverage 83.7 is an important77.6source of coverageI00.0 for combination of all workers of these who were tax covered incentives by anforemployer workers group and employers health plan has inproduced 1982 7 These proposals raise several issues. They would potentially accumulation of these benefits can equal or even exceed predisability, Because employer contributions to health insurance are not Like employer C.provided Equity--Employer health insurance, group health basic insurance life insurance coverage is possibly the basic for life reevaluating insurance life insurance coverage--even the adequacy plans provide when and effectiveness the a form employer of disability of contributes. tax incentives insurance Low by for Social benefits less than Security among one percent workers, Disability ofpublished employee Insurancedata earnings. (DI) fromisaPrivate the national largest pension survey public-sector plans of medium-size are program seldom currently federal-state This being testimony spending reevaluated describes for Medicaid as a the potential isprevalence, estimated source distribution atofanother new federal $37.8 and revenues. importance billion. CIncludes SOURCE: Full-year U.S. civilian Department nonagricultural 90.4 of Labor, Bureau wage 84.3 and of Labor salary Statistics, workers 6.1 andEmployee self-employed 9.6 worker families without employer coverage reported no health insurance No coverage, workers. many, Part-year particularly Benefits in for Medium 70.7 workers and Large who are 55.0 Firms, employed 1982,only Bulletin 15.7 part-time 2176 or(August during 29.3 1983), part high earnedrates lessofthan worker $15,000. coverage at all income levels. enhance federal revenues by broadening the tax base. The prospect of after-tax earnings. The accumulation of public program benefits, therefore, most significantly egalitarianrelated employee to income, benefit taxing providedemployer to workers contributions in the United to health States. _fits appear to be evenly distributed among workers--particularly among continuing coverage or paying immediate benefits to workers who become participation employer-providedratesplans, in supplemental and the efficiency plans byoffull employer time workers plans assuggests an that that contributory. and Summary: any large pays source benefits establishments to permanently ....suggest that and totally life and disabled disability 30.3 workers. insuranceBecause benefits 48.2 Part-time ofThethree tax different revenues workers toemployee be 62.3 gained, benefits: however, 18.8health, may belong-term small 43.8compared disability, to 37.4 theand potenti lifeal Summary: Together, these public programs finance health care services for only about 18 coveragepp. from 6 andany16.source during the year. These people--totalling 30 million Loss-S14,999 19.1 33.4 14.6 Loss-S14,999 44.7 68.2 53.4 of the year. In 1982, 29.4 million part-time or part-year workers were Full-yearAside The income from the distribution 66.7 tax code, ofother all 27.9 people incentives covered have 38.8 byalso an encouraged employer 33.3 group wide worsening federal tax regressivity among middle-income workers, however, is a together insurance with wouldprivate also bedisability regressive.insurance That is, programs, the additional can provide tax apayment strong9of [-time permanent Employer employees health plans of larger includeestablishments. the spectrum ofWhen workers the immediate at all levels of many disabled. alternative employees Life to public may insurance havedisability noplans privatemay assistance. life pay disability insurance coverage benefits outside in two ways. of the entitlement are about Long-term asfor widely DI disability benefits, held amonghowever, insurance workers depends as plans health usually on the insurance. worker integrate having The Social data a $15,000- 29,999 49.8 76.7 38.1 The views expressed in this statement are solely these of the author and insurance. costs of jeopardizing These benefits, a system together of private with employee insurancepension that protects plans, are morethethan $15,000- percent 24,999 of the population. 28.6 91.9 34.2 Part-year 60.3 13.8 46.5 39.7 aparticipation in 1982--are the is defined largest as segment coverage of the by auninsured time off, ininsurance, the UnitedorStates. pension SOURCE: EBRI tabulations of the March 1983 Current Population Survey (U.S. should 30,000- not 39,999 be attributed 26.8 to the Employee 86.6 Benefit Research Institute, 20.5 its 25,000- 39,999 6.0 93.4 7.2 covered Self-employed by employer group 53.6 health plans. 30.8 About half 22.8 (44 percent) of46.4 these participation plan major incentive healthtoargument insurance which for the in the against employer plan--covered employer disabled including group contributes. to remain workers health employer outside insurance and Employees health their the workforce. plans. dependents--mirrors insurance subjectTheto contributions pricing The a minimum integration the of in low-income workers relative to their income would be much higher than the earnings; rates of coverage among all workers except those at the very lowest ibility retirement provisions of pension plans are included as a source of basic First, plan some Thepaid plans Social byprovide the Security employer. a lump-sum 01d Age or and periodic Survivors distribution Insurance (OASI) of the is policy's the sufficient Security, presented workers' in Department work the history following compensation, of in Commerce, covered sectionsorBure employment, other are au drawn of disability-related the from many Census). the workers Level are public of not Benefits currently program(LOB) 40,000 or more 35.1 86.5 26.8 officers, Moreover, trustees, sponsors, the cost oforpublic other staff. insurance progr_ans--in particular, the major 40,000 130 million elements or moreworkers of mostandemployee dependents. 4.4benefit Econometric packages. 90.7 estimates Unlike pensions of private that5.3 health service requirement E. Summarybefore and Concluding they are eligible Remarks--Employer for a benefit grouparehealth counted insurance as workers were covered as the dependents of other covered workers. employer taxable distribution income. groupofhealth covered There insurance is, workers however, has by earnings. apparently an additional Table beenissue an 4 presents important to consider: thefactor family whether in participants even if they have not met the requirement at the time of the of public program benefits in employer disability plans mitigates the additional annual earnings tax payment level--generally of high-income with workers. fragmented EBRI employment tabulations patterns--are of data high z-term disability face valuecoverage to workers for workers, who becomeemployer-provided disabled. Second, disability some plans pay the face C. Efficiency of Tax Preferences: What Are the Alternatives?-- most Surveyprominant of full-time public-program employees alternative in meditun-size to employer-provided and large establishments. life This payments. insured aIncludes by That the all DI people is,program. theunder plan In age subtracts 1983, 65 living only the about in amount families 62ofpercent these of civilian of payments all workers from the were insurance Medicaid program--may purchase among be substantially workers and their reduced dependents by employer suggest coverage that significant of provide for the future economic security of workers, however, health, surplans vey. are In the contributory basis of most plans,private only employees health insurance who electin and the contribute United States. to In SOURCE: nonagricultural EBRI tabulations workers of in the 1982.March 1983 Current Population Survey (U.S. Deborah J. Chollet is a Research Associate of the Employee Benefit Research SOURCE: EBRI tabulations of the March 1983 Current Population Survey (U.S. SOURCE: EBRI Dependents' tabulations coverage of thefrom March employer 1983 Current health plans Population is also Survey an important (U.S. expanding coverage income current distribution tax are employee preferences, counted coverage of as all participants. given people by encouraging their covered public Benefits bylarger cost an to employer in employee which foregone the group pooling empl tax health' oyer revenues, does not is potential and roughlywork equal. disincentives Furthermore,created the by value overlapping of health disability insurance benefits assistance,shows ,rance is produced probably by alsothequite Congressional evenly distributed Budget Office among (CBO) workers. indicate As athat a tax cap on value, Employer insurance. orcontributions a In multiple 1983, about oftothedisability 55face percent value,and ofofall life theworkers insurance policy were forareaccidental insured treated(either somewhat death or insured insurance survey isbybenefit conducted Social paid Security annually to the forbydisabled disability the Department worker. benefits. ofSocial Labor, Estimated Security Bureau 1983 of DI Labor isbenefit an Department of Commerce, Bureau of the Census). low-income Institute, workers. a non-profit, A simulation non-partisan of private public health policy insurance researchcoverage organization among. disability, numbers of people and lifenowinsurance covered pro by vide an employer current plan economic would security not purchase for workers private Department of Commerce, Bureau of the Census). contribute 1982, 80 Department percent are outside ofof all Cthe ommerce, people scope Bureau with of the private of survey. the health Census). Only insurance current employees coverage were are bThe Civilian Health and Medical Plan of the Uniformed Services. 2 Before joining EBRI, she was a Senior Research Fellow at the U.S. source of health insurance coverage among nonworkers, and particularly among Note: Items may not add to totals because of rounding. arrangements. counted as participants; In general, retirees the package who participate of benefits inthat the insurers benefit program are willing are ainsurance better system plan infor1982. ensuring More wide than access half oftothese healthpeople care lived than alternative in families with reducing both private and public disability insurance costs. Integration is llt, taxingemployer little employer variation health contributions insurance among workers. to contributions these As benefits a result, would(including beemployer-provided regressive employerat every healthincome disbursements from the DI trust fund were $17.9 billion. differently Statistics, and in the reflects tax code; plan both, participation however, are as oftax-favored. January 1 ofEmployer the survey year. permanently income-redistributive or currently) program. by OASI. The Survivors' rate of earnings benefit replacement payments from in the the DIOASI health Department insuranceof ifHealth it was and not Hoffered--and uman Services, largely Natipaid onal for--by Center anfoemployer. r Health aIncludes and their nonagricultural families. For most civilian workers, workers thesewhobenefits reported areemployer their only groupprivate excluded. covered by an employer plan; half of all people without coverage from an alncludes civilians who reported employer group health insurance coverage at Services Research, and served on the faculty of Temple University. health children.insurance In 1982, coverage more than at any halftime of during all nonworkers 1982; excludes under the workers age ofin65 (52 aIncludes civilian nonagricultural workers, except those living in families to tot systems aunderwrite l family might income for be. a small less than employee $30,000; groupnearly is less three-quarters generous (perlived premium in families dollar) likely to be most effective in encouraging low-wage disabled workers to return _ributions insurance to pensionis plans) a particularly as employeevaluable earnings benefit would for probably low- and target middle-income the contributions trust fund in 1982 to disability totaled nearly insurance $34 billion. are tax-exempt. Individual income taxes program isState A.substantially Long-Term workers' Disability compensation higher for Insurance--The workers programs atare lower purpose alsoearnings anofimportant long-term levels source than for of any time during 1982, except civilians living in families in which the insurance 6Budget ofagainst Further, the U.S. the potential Government, economic revdisruption enues Fiscalfrom Year oftheillness, 1985 taxation , Special permanent of Analysis employer disability health G. or families in which the greatest earner is a member of the Armed Forces or an in which the greatest earner is a member of the Armed Forces or an bThe employee or dependents may be covered by a working spouse's plan 3Deborah J. Chollet, Employer-Provided Health Benefits: Coverage, 13 Private pension plans do not integrate Social Security benefits as greatest earner is a member of the Armed forces or an agricultural worker. 7Figure includes estimated total 1984 Medicare HI trust fund disbursements 12 than instead agricultural with agricultural 8Deborah the income of, benefit J.or less worker. worker. Chollet, inpackage than addition $40,000. Employer-Provided available to, participation to members HealthinofBenefits, the a larger surveyed p. plan. 93. employer By offering plan. Proposals to establish a national health insurance plan have been to work, since integration particularly reduces "excessive" earnings • and middle-income workers: .for workers thesewhoworkers, constitute employer most contributions of the working topopulation. coverage represent a Provisions, and Policy Issues (Washington, D.C.: Employee Benefit Research commonly are paid, The ashowever, long-term level on of benefits Social disability Security actually insurance expenditures received plans. from In for 1982, adisability disability only 45and plan, percent of disability insurance coverage for most workers: coverage by workers' those death.with greater earnings. Because DI replacement rates, in particular, insurancecontributions must be compared to potential increases in public and 75 percent of estimated 1984 SMI trust fund disbursements reported in: IBy comparison, 56 percent of all workers, and 70 percent of the ERISA 9Estimates of noncoverage among the civilian nonelderly population generally Instititute, 1984), p. 94. An EBRI simulation of private health insurance all private pension participants in medium-size and large establishments 10Aid to Families with Dependent Children (AFDC) is a state-based, federal bltems may not add to totals because of rounding. U.S. Department of Health and Human Services, Health Care Financing bIncludes coverage from the worker's own employer group plan or from the workforce, bDirect range between coverage Theparticipated income 14isanddistribution defined 16inpercent. anasemployer coverage of Members workers pension provided of andcivilian plan their by in thefamilies 1983. nonagricultural worker'sEmployee whoownreceive Benefit worker health CAll coverage benefits in to theallbenefit employees, programemployers is provided who purchase at no cost insurance to the (either introduced in virtually every session of Congress during the last fifteen replacement among these workers. The work incentive effects of integration, Unlike employer contributions to health insurance, however, employer suggests that 56-87 percent of all covered workers with 1979 family income belonged survivors' including todisability benefits, plans thatgiven retirement, integrated the share atorthe of offset all time workers Social of receipt. Security currently Like benefits. insured employer for In matching program that provides income assistance for low-income families with insurance Administration, programBureau spending--particularly of Data Management byandMedicaid. Strategy, In"Summary 1982, 86ofpercent the 1983of plan I. Employer-Provided of another worker.Health Benefits Research employer families plan Institute, without at any private "New time Survey during health Findings 1982; insurance indirect on cPension overage coverage Coverage or public is coverage and program Benefit received employee. Supplemental life insurance plans, not tabulated here, may be less than $15,000 would not have purchased private health insurance, if an 2 Employer contributions to health insurance, as reported in the 1977 general, white-collar employees (professional-administrative and technical- 12Social 14Employer dependent Security children. contributions replacement Eligibility to life rates criteria insurance vary inversely are in excess established with of $50,000 thebyindividuals the are states fullywithin Annual Reports of the Medicare Board of Trustees, Health Care FinancinB Review Entitlement," EBRI Issue Brief, No. 33 (Washington, D.C.: Employee Benefit aseligibility the dependent accounted of another for more workerthaninfour-fifths 1982. of all people without health primary contributory. coverage coverage from an or employer stop-loss groupcoverage health for plan aisself-insured important for plan) several may find reasons. that however, have not been carefully investigated in existing research. .ributions employer National to disability Medical had notinsurance, Care offeredExpenditures and pensions, contributed Survey, and basic to showed their grouphealth no life significant insurance variation plan. by contributions clerical workers) to pension are morebenefits, than twice employer-paid as likely todisability have an integrated insurance pension is broad taxablefederal as current guidelines. income to the employee. covered wages. For an average-age disabled person with lifetime covered 5:2 (Winter 1983), pp. 3 and 8. Unpublished Medicaid spending estimates were nonworkers covered by employer plans were dependent children under age 18. In Cltems ResearchmayInstitute, Most not people add toAugust wh totals o have 1984). because private ofhealth rounding. insurance receive all or part of insurance coverage in 1982. worker 4See, for earnings. example, Gall Alan R.C.Wilensky Monheit, and Michael Amy K.M. Taylor, Hagan, Marc "Tax L. Expenditures Berk, and Gail and plan as are blue-collar (production) workers. Published data do not indicate llIn 16Congress 1982, 20 of the states United provided States,Medicaid Congressional coverage Budget for alloffice, financially Disability eligible 15Budget earnings of at the the minimum U.S. Government, wage, 1984Fiscal SocialYear Security 1985, Disability Special Analysis Insurance G. provided by the U.S. Department of Health and Human Services, Health Care dpublished tabulation not available. the incremental cost of providing health insurance is low relative to the First, since most people covered by an employer health plan are members of In 1982, two-thirds of all workers who participated in an employer Lrance areR.usually Wilensky, calculated "Health on Insurance the basisforofthe employee Unemployed: earnings. Is Federal Since Legislation Health Insurance: Limiting Employer-Paid Premiums," Public Health Reports tax-deferred. whether pension plans that provide for immediate disability retirement are payments Compensation: persons under would age replace Current 18. Issues 62 Deborah percent and J. Options of Chollet, predisability for Employer-Provided Changeearnings. (June 1982), Health With p.lifetime Benefits, 18. Financing Administration. 5Deborah J. Chollet, Employer-Provided Health Benefits, p. I00. Needed?", (July/August, Health1982), Affairs table3:12. (Spring 1984), pp. I01-IIi. more likely to integrate Social Security and other public program benefits. covered pp. 22-24. earnings at the average wage, earnings replacement is 43 percent. With lifetime covered earnings at the Social Security ceiling ($37,800 in 1984), earnings replacement is only 24 percent. h h