EBR 55 26 32 22 3O I_LE 10 31 33 12 25 23 17 i0 18 13 16 621 19 2O 15 ii 14 36 27 24 29 34 28 Table 7 Rates of Employer Group Coverage and Employer CONTENTS Contributions by Family Income ................... 28 T-18 ESTIMATED AqOLLNrF AND /d_VAL GROt',3H OF EXPEN©]'IVRES FOR INTRODUCTION'............................................... 1 Table 8 Distribution of Additional Annual Tax Burden by TABLE 5 TABLE TABLE 9 6 TABLE 8 }DSPITAL CORE PER /NSURED PERSON BY SELEC]'Fd) TABLE 3 TABL TABLE E 72 relative to total compensation wasTABLE strong 4 between 1970 and 1975, (6.6 Among retirement re Based Contributions these 1967, venues. all onfactors thethis to Finally, oemployer income be Estimates public Household rates literature, above slowed areof group because security sector the health in of down Income cap the tax health they or midst would has ofor insurance ................................. expenditures felse suggest plan most pressure purchased obe we'll f Americans, dramatic fully participants co that vnever erage attributable more frtaxable otax-exempt mchange. get among than the somethese included tax-deferral aby worker third employees Researchers employer todeficits boththe ofinthe contributions all t 30deferral the ounder ofoffer individual have National personal pension less not of employer encouraged access The particular. Effectiveness toAlthough contribution health the The extension average of employers care Tax to health policy Medicare throughout ofhave insurance. health inbeneficiary Containing beenthe insurance reluctant nonelderly Health spendsto coverage Care reduce far population. Costs more health to lfor ower insurance hospital inc These ome however, of employer incentive family contributions are income. for low-risk independent Employer employees to health of contributions wages. to insurance reduce As a thatmay result, their are accelerate relati slow after-tax velywage this growth constant health trend. together cost atItallby is growth tax and by base. in theemployer individual Second,health itincome reviews insurance tax. theThe costs, results fully rise oftaxable recently significantly benefits completed over reported EBRI theresearch innext the SOURCE OF PA'I94ENT, 1976-]980 TABLE 1 THE COMPOSITION OF _IPLOYEE BENEFITS....................... 2 EMPLOYt_ CONTRIBUTIONS TO PENSION AND SELECTED WELFARE health income care, tax and andFICA. more In thanthehalf caseofofallS. hospital 640, the amount care. Most of theofcap thevaries growthfor of Medical contributions taxes onTAX-FAVORED Care Although control. Mr. oemployer INFLATIONARY the households; Expenditures Chairman, until enhancement industry 2/pension ]_LOYEE retirement AND and itSurvey, surveys REA contributions BENEFITS is of L benefits, CO_IPONEN_S aappears indicate pleasure 75BYpercent SPECIFIC including to OF recognize that t_I to be PLof appear OYER a TA employers reasonable, expansion Xthose TREA_, this CONTRIBUTIONS before by with have subtracting ofyou equitable been 1981 the antoday. employer range raising and out Iofam percent workers. developed benefits Table encourage expensive care than 9 per for The privately aalternati Distribution The method, year), coverage their importance growth it vhowever, einsured employees, with slowed health ofofreal of Expenditures persons. little dramatically insurance demographic for marginal their accurately cost-sharing Over success co tax forvbetween erage, the rates variables Hospital predicting in last since containing and employers 1976 five Care in consequently, 1960, and years the byexplaining foresee 1981 the effects moreover, forreal towhich increased just ofgreater cost health these data has 1.5 of with achie income very seeking Chamber vements higher unlikely, leless of velsCommerce rates are, complete represent however, of in data part, health or athat larger include acare less response further comprehensive cost percentage employer inflation slowing to taxpayments incenti addition health ofalways ves. privately for insurance to time produce family insured notcoverage. worked a income jump spending (that The at in few on proposals years. The for aCongressional tax cap on employer Budget Office contributions (CBO) estimate health insurance. of new federal CO_>OSITION OF E_PLOYEE BF_\]_FITSBY BKNEFIT GROUP, 1981 Private Health FUNDS AS A PERCENT OF COMPENSATION, SELECTED YEARS THE SIZE OF TAX-FAVORED BENEFITS........................... 4 TO GROU SourceP HEALTH of Payment, INSURANCE 1965-1981 BENEFITS, ..................... SELECTED YEARS 1960-1981 52 SI,_IJLA'f]ON OF 1T{E Insurance EFFECT 1 OF / JNCO_E ON 14edi _I-IE carePROBABILITY 2/ l,ledicaid OF PRIVATE 3/ contribution administrativetocosts 1950-1981, individual as well coverage ANDas AVERAGE the recei E_ployer loss ANNUAL vedof aPay_qents RATES contribution some scale OF E_ployer GROWTH economies amount Pa)_ents in between their public-sector Dallas utilization indi revvenues idual from Salisbury, versus health of the spending health taxation family care Executive for services ccare ovpersonal erage, of pension services, Director covered anhealth d benefits isbyremoval ofcare adjusted employer the received is Employee attributable ofannually group tax byplans; current exemptions, Benefit by Employer to thethe retirees. Consumer Research growth they percent. deductibles lower health insurance effective are for health available, leinsurance vThe Between els coverage, Growth incentive care and magnitude ofper can between copayments 1950 benefits income controlling successfully capita and for1970 of 19 than spending 7private in 9,by tax-favored and their the for revising at offset 1975 rate higher the for retirement group hospital reflects continued coverage effects ofbenefits le plan vw els orker coverage, saving. care several of of offered inflation participati as income. income among a proportion under ofactors: The these nand _dicare inAs unemployment, reduction the public-sector in plans aplan of enrolles empl the result, total oslow have yer has or employer probably exit changesof contributions on increased low-risk employers' the participants to demand insurance health for costs. employer-pro from insurance existing Nevertheless, coverage videdplans health as it(that ais insurance. percent clear is,that ofadverse Attotal they the revenues is, paid that vacations, might holidays result from and asick lowleave) (thatas is, wellstringent) as paid rest cap -- periods, $1440 The Composition DISTRIBUTION PFRof CEKTAGE Employee OF ADDITIONA DISBenefits TRIBUTION L AN%_JAL OF EXTAX PENDI'I1J BURDEN RES FO OFR$1800 HOSPITAL A_'N_JAL as a Percent of as a Percent of RA'IES OF t_,_PLOYFA GROUP COVERAGEAND EMPLOYER COKFRIBUTIONS T_ GROWTH OF TAX-FAVORED BENEFITS......................... 5 Table ttFALTtt 10 Estimated SENSITIVITY INSqJRANCE Amount COOF VEmployer EKAGE, Inflation and PROJEC Annual PERSONS TED Adjustment Growth FEDE h'ITt RAL K) of Employer LfE RE_'%NLIF£ Expenditures K-VIPLOYER TO SELECTED CONTRINJTION Contributions Benefit EXCLUSION Group LINIT IN CALE,\'DAR hares YEAR and 1983 Salaries , BY A11 tDUSF340 Benefits LD INCOHE CARE BY SOURCE OF PAYblENT, SELECTED YEARS ]965-1981 o federal revenues and tax burden. of Institute. Medicare With and me_dicaid is TOContributions Deborah COVERAGE spending. Pension Chollet, BY and I','ORKFORCE In a1981, Research Contributions Group STATUS theseAssociate programs Group AsEBRI. purchased a Percent EBRImore isofa conclude, elimination growth $I00 traditionally Price It is and likely, Index. ofwill wages 3500 ofhowever, Proposals been encourage this both in incentive generous. 1977. before that ofless the these The and would comprehensive second Coverage during (-dolla range estimates threaten type, rseconomic of ofperhospital employer coverage those the exaggerate insuadequacy recession, r which ed contributions care, and person) eliminate of the lower in employer pri particular, long-term vate utilization alltopension efforts federal family has tax will limiting is group exceeded compensation been same selection) ofaffect time, considerable. plan particular per thebenefits. raises the for howe exclusion the Tcapita Oabsorbtion Hospital G vultimate er, the ROUP interest. The Between is average spending of COmuch Care VE fragmenting employer of RAGE yield preferred smaller by risk 1965 among Persons B Selected Yof contributions that Tand OT athe at of Atax risks Lplan-sta 1981, living privately 8.8 existing FAMILY Source onpercent into health real yINCOME ers of in toemplolyer employer employer insured t_alth Payment, households insurance represent. of1/,wages population group insura contributions 1979 group with contributions. nce plans and As no aplans salaries tends result, byspouse into more has to toa compensation. pensi spending. on Nominal plans Possibly grew Employer Employer bthe y 23contributions most percent; asoften-quoted a participati Percentto ogroup n of figures life Real in absolute insurance on Benefits the level numbers and and and disability Insurance rgrowth ose byof annually lunch periods for family and other coverage paid TAX and employee EXCLUSION 3576 for time I.I individual bnot llTS,directly 1983coverage spent--ineffective production. in (in do]lars) 1/ 1976-1980 Total ......................................... Profit-Sharing Plans Health Life 35 THE Tax ESTI Statusb /IATESOF TAX BASE AsEROSION a Percent.......................... of As a Percent of Tax-Favored 8 Contributions as a Compensation 1/ as a Percent of Compensation Private Public Total benefit Fa)ments 32.5 100.0 and o increases in the cost of health insurance as a result of revenues levels. than one third Lower Percent that of are levels all of foregone hospital of health in care care the Percent delivered utilization tax-deferral of in thewill, United of in employer States. turn, Percentpension reduce of income co income While tax nonprofit, to traditionally than verage improve preferences 400 the insurance for was percent use nonpartisan, future pension comparably ofinvolved also the (see retirees for CPI have Table funding employer narrow. public little toat little adjust 10). the inpolicy cost-sharing health More anticipation While relationship very health than research insurance part time insurance half on of ofthat of to the the organization contributions, andall near-term costs part discrepancy Social response plan of mayparticipants insured Security understate founded changes toin include ERISA, per consumer. will incapita inwage with net the the 1978. be ]976 than health number present raised Benefitsuch insurance the are ofGroup smaller cost significantly statements of asplans indi aPrpercent opo $]22 vWages suggest. idually All may rtion less Persons increase of and likely ofcompensation purchased Tax-exempt Salaries 1/insurance Proportion to have health $486 employee All fell costs health of Benefits insurance atbenefits for aninsurance Proportio average smaller I_'orkers relati Nare nABenefits 4annual coverage /employers, 2only v of /e torate 4.7 the in 263 Concluding place employee the Lesspercent. average than a rbenefits (ii) elati one-third l_emarks cost v 4ely / Impact Alth ofare o heavy the (27.1 ugh oncompiled plan ]_ployer the tax percent) arises. sustained burden byCosts. ofon thethe gr families oChamber wthtotal of atpensi of level lower onCommerce of participati levels employee oof nof the benefits income. rates United 1983, is $4.6 billion. Based on static coverage assumptions, CBO's projected Proposed Limit All P Households rojected Households Decrease Affected Pat 1 ent ble_ ca re 1950 1.8 I.i 0.7 i/ - 1977 Total Perso 134 ns };'ith Covered Persons 540 All Persons NA t_;ith Legally required employer payments 9.6 29.5 TAX-FAVORED Compensation BENEFITS: GOALS, Amount ACHIEVEMEN_fS Contribution AND TAXAmount EFFECTS. I0 Contribution Change in Change in Family/Individual Federal Increase in Projected Direct Health and Annual Average Percent Percent Average Percent 1955inflation 2.5 in health care 1.5costs. 0.8 0.2 contributions. All tax-favored The size 3benefits / of public-sector 8.8 spending relative 27.1 to privately-insured 100.0 growth the This EBRI Bradley-Gepha an absence employer sponsors pattern in pension rdtofof contribution research angenerous comprehensi and employer health andcoverage veeducational to contribution plan family taxfor participation, reform cohospital vprograms than eragebill are received care in persons and an (S. emerged sudden effort a1421 contribution living /H.R. for increases to provide in many 3271). households reasons; in amount a the sound The near-term or aggregate least spending reduce capable Employer health cost for the cohospital trend of vcare erage group expanding ofcosts employers private care health and benefits. is health ultimately are the plans, able result insurance, Further, to as dampen provide ofa differences rule, assuming the inflation atlong-term current cover (i)in most inconstant re outlays the health venue if not insured rates loss care all Family 1978 was pre-tax of growth. percent IStates. reported n general, more interrupted vofEmployers alue Employers The in than wages the the figures of7federal Chamber percent employer byand have F:mploye are and theobjected salaries; of income 149 based (see group employees, rpassage Commerce GTable ro tax on up coverage. toannual benefits o structure the 4). fdata public t_'it ERISA, proposed hBetween survey represent E_on p687 ]oyer is and recent responses which not taxation 1975 pri discretionary sufficiently data vand ate, taxes by of 1981, FJnp suggest $315 contributions have are aloyer small real deferred progressi tax-favored placed that number employer vebut the toaof estimates of potential federal revenues between 1983 and 1987 reflect an FICA P robabi 1i ty 5.3 16.3Proba bi 1i ty Household Coverage Additional Revenue of 1/ Affected in Limit Additional Revenue of Total Payments Insurance Other Tota i Medicaid Other 1960 3.1 1.6 i.I 0.4 1960 EMPLOYER-PROVIDED 1.1 HEALTH INSURANCE - COVERAGE - AND BENEFIT 1.1 100.0 2/ ]979 Incc_e Co 164 verage Contributio772 n Contrib442 utions Unempl o)ment Compensat ion i.0 3.1 Probability of Per Income Probability of Per Income (annual) (in billiong) (per cent) (percent) Income 2/ Taxes Inccme by Limit Taxes Income 3/ 1965 3.8 1.9 1.5 0.4 Tax-deferredAll benefits of horkers' these factors Compensationhave 4.1 served to 0.9 raise 12.6 , the rate 2.8 of 46.6health information emplo 1965 contributions Tax-Favored associated between Bradl to spending GROWTH eoffs y-G yer e e.................................................... tphardt $500 cost for Inwith basis both contrast Benefits: and personal of 1.5 tothe $1200 group for the bill health tax-deferral topolicy health health Goals, distribution intax-favored 1977. requires insurance decisions. care Achievements insurance 0.2Iiof/isbenefits, employer Because important that as ofbenefits. 13.3 EBRI aand employ allof contributions share does Tax both employer in ethe r The Effects not ofconsidering 1.3 legally relati co compensation take relatively ntributions to health vpositions required ely pensions 13 anarrow slow revision fell insurance employer and 86.7 on growth may at range public the an be of ]98with prices. possibly of health ultimately consistently employees pop 0 employer ulation, a spouse insurance the ofat paid contribution most the present. high least firm. contributions imporant arevalue some 4.1 181 In This UNITE percent. and on isof spite remains simply employee D because (2) the Sof TATES difference constant The the potentially true, the benefits. SP(A distribution historical yeven TEexpect 926 coverage when is wideprecedent _ny taxation attributable children of variation tax-favored rates benefits, to 495 established are across significantl into present the benefits hospital such worker health by in asy pbenefits ost-ERISA (iii) paid contracti byImpact employers. on onofthepensi Tax-favored rate on of participati Health benefits oInsurance n totalled rates Coverage. was onlya 8.8 temporary percent average employersannual (fewer growth thanrate i000); of more thethan employer 30 percent. sampleInisspite notofscientifically their size, Family Income Private Coverage Change 3/ Private Coverage Chat_ge 3/ Other legally required payments I_/ 2.4 7.4 1970 4.5 2.1 1.9 0.5 1970 1.9 0.7 36.8 1.2 63.2 C0},_4ITrEE ON FINA_'CE 1965 61.2 17.2 41.8 2.2 58.9 -- 38.9 1975 6.2 3.0 2.7 0.5 of these contributions, modest adjustments to the level of proposed cap can contributions policy PROPOSA hospital of between 1975 the The federal employer relative household. issues. Ltax Sthose Employee TO andpolicy REFORM pension importance be 2.7 physican-owned that imputed Younger TAX benefits toward contributions are PREFER of asfamilies tax-deferred these employee private EBlue-Cross 1.4 NCES serve factors (persons FOR relative health earnings, aHEA /51.9 Blue versus innumber insurance, Lliving raising THto and Shield INSUP&NCE total those of1.3 employer at inboth purposes. plans the a ....which compensation household atsame contributions in a 15 philosophical arethe timPensions, e48.1 entirely with growth raises 1930s. to a households, practices insurance care Pension risks AOpponents and that copotentially represented vhowever, erage Profit-sharing are attuned of provided reduced probably important by todifferent through Medicare tax problem biases preferences employer employees, andthat tax Medicaid arises for group revenue broad employer reimbursement inplans. the participation estimates context health In polic 19797, insurance ofupwards. higher yin .more the regressi average negligible: payments raise holidays vtheir ity annual and and costs The of Discretionary fully other thmarginal rate eofSocial providing time taxable of taxable tax off, nearly Security benefits rates are discretionary health fully 8affecting taxpercent. insurance on taxed. earnings. benefits 14.1 future benefits. The Thegovernment decline automatically retirees Increased 43.4 ofhas are realencouraged grow likely employer employer with to Loss phen of selected, however, wages omenon.and estimates norBetween salaries is itof 19 in weighted 77 federal 1981, 16.7 and and revenues to 197about 9,be representative the that 8.5 rate percent 85.0 mightofresult of woof rker total true from participati compensation. national 14.2 taxation on totals. in of Average, 1976-1980 150 682 417 $1440/576 $ 4.6 - $1970 0-10,000 47.2 10.0 3 0.05 35.8 2 1.4 52.9 138 26.3 2.7626.6 1976 6.4 3.2 2.8 0.4 1976 2.8 1.6 57.1 i.2 42.9 plans i/ 3.9 12.0 44.3 $ I- 4,999 9.3t_2ARI NG 0N 88.2 8.2 5,000 Time 0.3106 not _orked 2/ 0.0875 10.0 0.3428 30.8 0.0785 1620/648 3.7 12.5 19.6 10,001-15,000 14 0.11 9 168 1.34 1975 health insurance 1977 44.7 6.7over 8.2 time cannot 35.4 3.3 be 1.1 established 3.0 55.3 from 0.4 31.3available 24.0data. between contributions the The Size idividual 1976 of Tax-Favored and income claim 1981that tax reflected Benefits floor this for argument emplo deducting yer ignores adjustment health the insurance tocomplexity ERISA expenditur asof well consumer es to as 1977 and Federal a tax practical We CBO's Possibly policy are3.0 estimates pleased level. has due not to to ofIn address discouraged th the legislating e1.8 tax success the burden60.0 the Committee the of thatMedicare emergence health wouldconcerning 1.2 care result andofMedicaid providers generaous fromthe capping programs, taxation in30.0 health gaming the of younger profit-sharing contributions employer affect be Ironically, plan tax-exempt significantly is aachie primary and significant isboth employee vsummarized to ed plans health by earner) higher advocates keeping and costs proportion insurance than employee inare Table the for those and also health price during 2. thrift critics affecting much ofofinsurance all less co aplans of period verage persons current likely revised provide isto ofthe who toemployees expanding retirees. tax have possibility receive forpolicy health income participation an In low. insurance addition, cite that deferral employer Merged some the wages. costs pri than the (i) vategrowth 83 might Impact percent In pensi the ofresult onon other absence the of plans inall benefits Generosity several ofpersons shaowed statutory ways. through of with moHealth destpri First, change tax vate gr Insurance incentives. oemplo wth, health in the yerrequired an insurance taxachie Past liability vement rate concern wereofunder covered employer that overFICA low is by Nevertheless, employer healthestimates insurance based contributions on theseare data fragile. captureThey a picture are susceptible of the general to 5,000- 7,499 Rest priods 22.7 -- 86.3 3.8 11.7 19.6 (percent annual growth) 10,000 ]800/720 0.3900 2.9 0.0794 11.1 0.4104 21.6 0.0712 15 1978 ,001-20,000 1978 45.6 6.8 21 8.6 0.12 35.8 3.4 141.2 3.0 54.4 147 0.4 33.6 0.8420.9 Other tax-deferred Other taxable benefits 3/ 0.3 0.9 1978 3.0 1.9 63.3 I.I 36.7 Coverage ............................................. 17 7,500- 9,999 33.3 89.5 29.8 THE TAX "/REA_.,_hT OF }2,[PLOYL_ BENEFITS 15,000 0.4612 0.0715 0.4778 0.0638 1980/792 2.3 10.0 20.7 1979 20,001-30,000 1979 46.2 6.8 44 9.9 0.18 35.0 3.4 231.3 3.0 53.8 191 0.4 33.9 0.7619.9 and Medicare demand employee contribution Congress 1979 Similarly, benefits encourage for benefits. established and2health the /Medicaid to private 3.0 effect coverage. insurance areimbursement, of saving standard theinfor tax 2.1 0.2 an exemption of interdependent, retirement. access these 70.0 public of to comprehensive health Health multi-product programs 0.6 0.9insurance benefits, have health contributions market. leddisability insurance inflation 30.0 2.3 They reductions contributions coverage. 10 employee insurance surpercent vey data demand plans. ofThe in onadjusted toemployer the for social significance Athigher comprehensiveness the gross insurance plan same nominal pro income. of time, visions demographic wage programs, empirical compensation of between coverage variables studies legally 1977 and insuggest required and in response redistribution determining 1980that indicate to payments slow txprivate policy ofreal that are the particularl exclusion The an as employees would rates in (ii)employer employer the Growth of yrise. Impact private pri Eof mployer would ofgroup group vate remarkable employer on Tax-Favored Since lose Employer health pension plan. plans contributions health employer contributions insurance in suggests Costs Employee terms system insurance ............................. payments to othat fand Benefits tax-favored the to ispension these coverage accelerated health maturing, toplans FICA coverage benefits altogether. insuranc have the are lab enot omix rdeductable that among are simply force of are Increases workers, presented 19workers not growth absorbed under taxed inthat even and the the in as distribution their assumptions of employee about post-tax benefitslevels among of (I)employer legally required contributions, employer as payments, well as I0,000-14,999 53.1 91.5 48.6 1976 18.4 3.2 NA Discretionary" tax-favored benefits 8.8 27.1 20,000 0.5244 0.0632 0.5343 0.0564 2]60/864 1.8 9.1 21.7 30,001-50,000 1980 6.9 88 0.22 3.4 33 3.1 267 0.4 0.68 1980 45.9 10.0 33.5 1.5 54.1 35.3 18.8 1980 3.1 2.2 71.0 0.9 29.0 (iii) Impact on the Rate of Health Insurance Coverage ...... 21 15,000-_9,999 72.4 92.5 67.0 ]977 9.8 11.1 NA 25,000 0.5795 June 0.055 22, 11983 0.5834 0.0491 Introduction 1981 6.9 3.4 3.1 0.4 1981 50coverage ,001-]00,000across 45.7 Contributions the 10.8 116 population. to pension0.18 33.4 Federal ans tax 361.5policy 54.3that 323 would 35.7significantly 0.4318.6 health wage more has Table 1981 on coverage been growth. than 8. insurance Employer The These 80 only difference percent The rates, 3.1 estimates acontributions slower coverage minor of benefit all between growth contributor indicate plan implies 2.3 enhancement, of to proposals participants employer that health that to74.2 the the and distribution health insurance the that development make employer would current no insurance 0.8are contribution modify willingness of and broadly system tax growth contributions taxburden of preferences distributed toto of emplo 25.8 co across absorb vthese erge yer as with employer beneficiaries argue income inflation in hospital tax that plans, Tax-favored The cost incentives, in rational costs. health expansion life is of beginning providing insurance has Beween care employee consumers ofled costs. health toco 1976 to and change. vbenefits erage discussions are supplemental insurance Employees andunlikely to 8have 1980, / marginal benefits of grown have the unemployment national to more rate borne reduce workers offered rapidly ofat health increase coverage by least benefits --employer than insurance part-time part in wages for provide average of group and and the the or occurred uniformly scope (iv) and Impact during defined rateonof that Taxasinsurance Revenue periaod.proportion andcoveage Burdenof..................... wage as likely and salary effects income. of 23The reduced valuetax of corporation Tax-exempt current to (2)the fully particular income benefits taxable income to level the employee tax,employee ofhowever, taxation benefits 4.7canthe proposed. beand net divided increase (3) tax-favored into 14.5 intwo employer groups: employee taxbenefits liability 53.4 benefits. on 20,000-24,999 78.8 94.0 74.1 1978 30,000 profit-sharing 0.6264 11.2 plans 4/ 0.0470 27.2 3.9 0.6252 12.0 13.6 5/0.0410 Over 100,000 108 0.08 27 403 0.40 25,000-29,999 Group healt, life, 81.9shoTt-term 94.7 77.6 1979 10.1 12.4 40.3 35,000 0.6653 0.0589 0.6596 0.0344 across households at most levels of income. In 1979, the rate of coverage SOURCE: health care Congress cost inflation of the United has not States, been established. "Congressional Budget Office, a households insurance THE reduce seasonal share EFFECTIVENESS levels The workers, ofprotection atgrowth total ofallpri OF and of vcompensation TAX ate income workers employee against POLIC health le Ywho vels benefits ON insurance may unanticipated, are CONTINUING reflect would laid asoff coverage, be athe HEA form -- only maturation catastrophic Lsuggests TH ofCARE employee or mildly jeopardize increases of progressi compensation evgroup ents. vaccess e,in health Some and the to has plans. Medicare contributions burden particular salaries, under forContributions employer of the Inand inflation and service plan; 197Medicaid has slightly 9, health to disability significantl more group m category through ore insura spending than faster that insurance nce reductions °- 60ythan hospital percent 68consistentl contributions raised percent either make incare "normal" othe legally fyno pri exceeded real 4.2 -- v and contribution ate-sect that those value rates required or,drives theof that of growth employer employer-provided 12.9 nhealth health for would onagricutlural ofdependents' privately insurance eliminat care payments cost e Average preference. mandatory plans is fully likel taxable and Annual yByto employer pri comparison be discretionary These vGrowth ate modest. willingness pensions. effects toIt thebenefits should are impact Now, tonot be absorb -- of concern noted, reflected, primarily tax-deferring health however, over however, employer care deficits that pension cost in payments part federal inflation is contributions, of leading for the revenue time ha FICA vto e SOURCE: Disaggregating which taxes R.M. Theare primary Gibson the deferred total and assumptions D.R. and level benefits t',aldoof ,behind employee "National thatprojected are contributions tax-exempt. Health federal Expenditures, revenues reported 1981," frominthe the 30,000-34,999 83.6 94.4 78.9 1980 10.4 Statement of _ 19.9 12.0 Other tax-favored benefits S/ 0.7 2.2 40,000 0.6961 0.0377 0.6867 0.0271 Average Containing COSTS health ...................................................... Annual and bledical life Gro_cinsurance, Care thRates: Costs Through blarket Forces," (May 1982), 31 p. 35. SOURCE: Congress of the United States, Congressional Budget Office, Health Care Financing Review,' 4:1 (Septc_-nber 1982), pp. 24 and 27. 35,000-39,999 82.0 94.S 77.5 45,000 0.7187 0.0267 0.7064 0.0197 Private insurance that requires little or no cost-sharing by coverage attracted 1965-1981 rate inflation. coverage coverage. at which and among increasing benefits, Other 4.6 these middle-and workers service attention as well low-income categories and 16.5 asin their employer recent 11.3 persons, dependents -- years. efforts primary promotes -3.0 might Attention tophysician contain be gross has excluded the inequities intensified coverage, -7.3 costfrom of "Containing not among coverage health w or profits them insured the Employer-Provided orkers fully and worked tax altogether persons short-term exemption between insurance. spending provide throughout taxable },tedical --with is the isemployee for Health and for Care probably family of defined the ages Although hospital employer long- consumption; Costs pop oInsurance fbenefits income ulation, 25 inat Through the and data contributions care. abo the magnitude 64 over Coverage despite vthese that employee's ewere Market $15,000 During theco would perverse and last include vof to ered Forces" was those health wage. effects Benefit thirty directly high bydemographic day-care (years, bThe insurance _ay rath an years. (73 Growth e 1982) fact rempl percent reflect average ,benefits than othat yConsequently, has er trends. p. or in 36. probably employer hospital changing pensi the more) and, on become projections. rtaxation proposals egressive highly oof St_'_RY: at Tax-deferred that emplo income contro could yer lev versial contributons els have benefits abothe velements e effect include, $30,000. involves in primarily, of The shifting thereducing mild debate degree funds employer to coverage of out reform contributions progressi ofingeneral the vity these tax taxation Chamber of R.M. ofCommerce employer Gibson data and contributions D.R. among P,aldothese , include: "National three(i) groups Health the clarifies cost Expenditures of health the , magnitude insurance 1980," of 40,000-49,999 82.0 93.9 77.0 50,000 0.7333 0.0146 0.7188 0.0124 Average 1950-1981 annual 4.4 3.7 4.9 2.3 CONCLUDING 1970-1981 REMARKS 4.6 .......................................... II.I 6.6 -3.6 36 -7.8 1/ term Includes and disability revenues from both individual income and Social Security taxation to retirement income and capital accumulation plans. These Health Care Financing Review, 3:1 (Septe_nber 1981), pp. 44-47. 50,000-59,999 8].8 92.1 75.3 Legally required e_ployer payments and 1970-1981 4.0 4.5 4.6 -2.0 growth andincome ,varied 1976-1980 insurance little by income 11.9 (see 4.2 Table 7). More 14.5 than 12.990 percent 18.3 of all 47.7 because nature had between consumers 1975-1981 a much ofthe Thse of The The effects. ofgeneral smaller apooling health simulations 2.3 1980 concern Current The effect population of care that effects cannot risks Dallas has on the Population 8.6 of and provide growth probably within the L.these persons Salisbury growth ofprecise proposals 6.1 employer Survey benefits raised eligible of employer indicates estimates group fall the -7.8 occurs for demand into coverage spending plans atof that four for the the more can categories: health through for changes expense generate -9.9 than health care the in 60of -of contributions preventive possibly, private coverage. treatment costs revenues tax-favored simulated among health and Possibly of routine service employer benefits health Medicare into toinsurance pension dental Social of coverage, insurance. more have contributions enrolles plans. Security. and and interest absorbed vision and insurance and Critics routine than Medicaid care a above rising of the benefits. benefits the current dental level share beneficiaries exclusion and tax are of of Many potential vision total policy not limit ofrose fixed these compensation. care reform inrevenues atconsumption relative coverage 7983. an contend average from Social In -- to plan. ocoverage tax-favored ver very 5/ At provisions low constituted programs. current levels c of oin verage about incom response e rates, 3.4 is topercent due 73health percent primarily ofcare total of current tocost compensation lowerincreases wrates orkers of aged in are employe 25 1981. not tr o 1/tax-base coverage, Inc]udes erosion (2) boththe federal that ratecan ofinco be employer meattributed tax contributions and to the the _-nployer's growth as aofand percent employee e_ployee's of benefits. cost, shareandof discretionary taxable benefits 23.7 72.9 60,000-74,999 77.4 91.9 71.1 Executive Director TABLES Security taxTaxation revenues All discretionof aryrepresent these benefits benefits about one is quarter 22.9 deferred of total until projected 70.5 the employee tax Yederal payroll taxes. About three-quarters of the tax burden results from 75,000 + 73.6 87.0 64.0 Estimates 1970-1975 services and of Tax contributed Base 6.6 Erosion to inflation 7.4 in health care 7.3 costs. - The relative revenues. Full)" taxable benefits 14.1 43.4 growth health benefits, annual insurance. are public (1) more changes in sector. insurance rate wage together vulnerablethan Recent inof and the Federal coverage 14 salary econometric with generosity andemployee policy hospital income. 18 among percent, ofestimates vthat acation co the Slower coverage verage population would respectively. growth time pro suggest to vided reduce tax and of that polity rest wage by that eligibility might employer Average periods, the and that ensue tax private salary would group eare xif or emption emplo coverage intended increase, incrase plans, health yer of SOUpersons available, percent significant the RCE" Other context R.A. with tax-exempt To of Gibson of cross-subsidization the investigate the employer strong civilian significant andand group D_R. the population increasing problem co t';a]do decline verage, among , was of '_National tax in employees including coverage covered real incentives employer Health who persons by lossan participate for among Expenditures employer contributions employees in some the , workers, group vin ery tothe 1981 demand suggests health lowest plan. ,"EBRIa 29 wages group that a(3)can capthe the coexpect makes von erage Second, Without "generosity" rate withdraws the the to among and exclusion employers receive question, growth distribution funds low-income ofaof from of private employer anticipate the emplo tax-favored federal the persons of yerplan. pensi health group contributions government that o with ninsurance benefits coverage when workers relatively they must will and is as coverage draw the the fragmented retire. arespond share insensitivity lines sensitivity among 6_ toto of workforce /taxation specify Recent worker total of of federal income According tax liability. to the Chamber State ofand Commerce local data, incomeemployer taxes arecontributions excluded. to Tax-favored benefits 8.8 27.1 1976-1981 i.5 I.2 2.I - SOURCE: SOURCE: benefits EBRI EBRI analysis 3/estimates of from privatethe0.5 health National and insurance Income and coverage. 1.5Product Accounts,5.7U.S. Table 1Health Composition Care Financing of Employee Review Benefits , 4:1 by (Septe_ber Group, 1981... 1982), pp. 324, 27. Estimates assume that taxable excess contributions are ineligible for the Total, all persons The debate 2/ over Social 60.6 Security Reform 92.9 focused in part 56.3 on the issue contributions under Medicaretoorhealth Medicaid, insurance moreover, were taxed is reasonable either inonly whole if or persons in part. who lose to econometric in ranges revenue turn, raiseofestimates implies employee income, SOURCE: studies slower Eproducti BRI recei to tabulations indicate different vgrowth edvity, an ofemployer that of reduce estimates levels the atcontribution time produced ofleast taxlost the bybase. one thefrom cap. Chamber to third work Erosion coCBO's ofvof erage. and Commerce the projections build ofincreases ofAsthepositive a tax rsult, base in of performed the of insurance Low-risk importance plan that (2) health during changes price modification aemployees costs, simulation 1979. of insurance of in employer health private byi0of /comparison, (for contributions of _iree insurance the costs, example, insurance thequarters coverage rates rose (3)men, tochanges of basconsumers. ybyofdemanding offered young health aless allsource inworkers, than employees the insurance byhigher The 12 employer rate ofpercent, cost demand and cash ofand co ofhealth nearly group vwages and these erage and those inflationary maintained plans or that 90 insurance services, with greater percent might has no which greater emplo compensation participation households. employer yer employee plan share contributions Department The rise patterns. benefits benefits ofusual during of compensation ma Commerce. cost to yperiods should have factor rising be accounted ofinused tax-favored. costs slow thefor wage form for encourages projecting growth ofonl tax-deferred Great y about and health continued care, fall 17however, insurance percent as orinflation wage tax-exempt must growth of the be in employee R.A.obenefits Tax-exempt Gibson totaled andbenefits D.R.more l';aldo include than , '_32 Rational employer percent Health contributions of wages Expenditures and salaries to , group 1980 inhealth ," 1981. medical expense deduction under the federal income tax. the United States. Chamber of ComGerce of the U.S., Employee Benefits 1/ Estimates based on persons under age 65 living in households of civilian SOURCE: EBRI tabulations of estimates produced by the Chamber of Commerce Table 2 Tax-Favored Employee Benefits by Specific Tax HealthandCare lifeFinancin insurance, 9 Review long-term 3:1 (Septe-nber and short-term 1981), disability pp. 44-46. income Health 2/ Household income before taxes, but including cash transfer pa)_ents (e.g., 1981 (1982), pp. 8 and 30. of tax base erosion. The revenue-enhancement debate also involves this SOURCE: National Income and Product Accounts, U.S. Department of SOUhealth affects occurred. the rise of RCE: full-time distribution in EB care the health RI public tab costs. full-year ulations insurance ofsector's employer workers, of contributions the ability contributions _participated qarchto198finance 0 as Current toin health a government share an Population employer of insurance compensation programs group Survey coverage health inbetween general, plan is _,'age They benefits, employee however, accelerates. Ipressure aemerge co history public-program taken / vstable eand rage Estimate doto salary of indicate, among relations. decline among of avoid in has however, chronic the the is _,'orkers. The the workers benefits been unintended health United based during however, straight-line currently illness remarkably the on and States. services 1979 are growth levels or the consequences. likely their insured and impairment) stable function market, Chamber estimates 1980. of of dependends, topopulation these the obtain relative served however, of It medical of recei Commerce is Consideration benefits tax-favored health unlikely by to in vand ehas care the current benefits the of insurance been (4) cost as component absence the that wage tax of declining. tax aU.S., from oftax these share rehospital preferences growth coverage of venthe of policy ues an Employee persistent the plan ofemployer relative and change in Consumer care. total that for the the potential levels of Treatment, Amon revenues insurance, other g households tax-exempt indicate 1981and ................................... thatathat variety benefits would a relatively beofaffected smaller in ansmall benefits by effort increase a captothat ofmaintain the ininclude 6 exclusion the level pre-rax dental of of Nearly pensionInsurance three-fourths contributions Association (23.7 as a of percent proportion America,of of Source wages total Book and compensation of salaries) H_lth over of Insurance this the figure last premiums is the medical Deborah care Oholl component et, Ph.D.of the Consumer Price Index. Social Security benefits, projected to calendar year 1983. Commerce. (Bureau of the Census, U.S. Department of Commerce). Price Index between 1960 and 1981. 2/ Estimates Benefits I/based Includes on 1981 go civilian vernment (1982), employee wage pp. 8 and retirement, and salary 30. Railroad _,,orkers. Retirement Tax, Railroad insurance, childResearch care, merchandise Associate discounts and employer-provided Data, 1981-1982 0',ashington, D.C.), p. 12. U.S. Depar-_nent of Iqea]th 3/ Estimated at the midpoint of the income range. distributio issue. nEstimates i-_emplo of the yment oftax and future Cash burden. Sickness tax-base Each Insurance erosion of and these state that effsickness ectscan benefits isbediscuss attributed insurance. ed in turn. to the and 1960 that contribution. contributions private very year. the and similar Hospital The 1981. Social sector. Although expansion excluded EBRI's 9to/ Security the care it It simulation from of distribution isisis clear system employer federal the difficult that of most in income pension pri of coverage particular. inflationary vemployer ate toandreconcile and payroll rates insurance welfare group component have Incoverage taxes reductions addition, plans covexpanded erage would of over across health rates produce growth the in rapidly both care last that theaof 3/ differences may They must Income beinclude conclude considerably unit Health in aisthat clear per fiinsurance ve less tax definition capita thousand policy, thanbenefits spending the dollars. ifof employer's atobjectives, all inbetween the successful, average United public-sector the States, cost assessment is oflikely providing on programs average, of to individual be health haand van e Table 2emplo Proposals compensation to/ total Because y3er Employer compensation health to has Reform base insurance been Contributions Tax prices incorporated remarkably Preferences contributions. are toassumed slow. Pension for in Health Social and at Current Selected Security's the Insurance tax 1960 policy projections level, probably all fail employer raises to represent twenty compensation Generally, employeryears contributio either meals. both levels. can be legally nsthe attributed These The rate torequired headverse alth benefits oftoemployer changes insurance, employer selection constituted in contributions, payments thereal of tax low-risk burden marginal 3.5 (9.6and percent percent would employees tax thebof eof rate rates. sewages verely total from and Z/and and lqdman 2/ Includes Services paid , vacations Socialand Security payments inAdministration, lieu of vacation; payme Social nts forSecuri_ _ontributions i/ Includes both to group healthhealth insurance and group are allocated life fortothisreal year.benefits for 1960. i/ Includes compensation EBRI estimate in 1981. of employer I/ contributions to profit-sharing plans Welfare Funds, 1950-1981 .......................... 7 _oliday_ not worked; paid sick leave; payments for State or National G_ard Bulletin Annual Statistical Supple-nental, 1981 (I',:ash_n_ton,).C.), 1/ nontaxable services. thirty over reflect inefficient Includesthe years sources earnings Duty. last Since benefits wayha jury, thirty of to ,v1965, econtain variation witness achie may property years, the imply vand edproportion further vmajor oting in the and antax-favored pay important absence transfer improvements inflation allowances; of all of income. redistribution benefit in and hospital time-series health in pay_nents the growth care for care income of data time costs. relative tax purchased lostsecurity on burden due to employer total across with of privatel _ased population, growth emerge public-program insurance onof yin The The Chamber emplo to insured with the rapid them. national ybenefits eeof absence little consumers benefits, growth Commerce Conversely, and variation income of ofprivate-sector however, are employer figures. employer and higher-risk in thethe product have contributions contributions result dollar been incentives accounts employees ofamount misleading qualitative to provided received health compiled for (for forhealth example, some insurance two changes bybyhouseholds reasons. othe insurance dramatic women, inU.S. asthea private Given existing significant traditionally distribution reg benefits ressive.the coverage Proposals against (i)plans, drop growing As been of Impact amoreover, in rates proportion health these generous. that on importance projected significantly would objectives, the insurance may generosity ofmodify This generate of revenues. income, the coverage, and, has among private of the afinally, health second-round been tax persons lower-income Raising are pension exemption assumed insurance ina at thorough part theincrease the system for to worker cap co aremain verage. understanding lowest health from response inin households, $1980 providing at insurance leemplo vels to/their $792 the yof ee of salaries) or discretionary employer payments (14.1 percent of wages and pp. 207,220. to death in family or other personal reasons. 2/ Includes scae persons reporting no incane in 1979. 2/ Includes EBRI estimate of employer contributions to employee thrift plans Table 4 Failure Inflationaryto distinguish and Real Components among the of growth Employer of legally required employer 3,/ F£RI estimate based on Chamber of Co_-merce report of amount of CJlristmas or current at different workers levels andof future income. retirees. Growth of employer group health the results. coverage health population. coverage The First, These inFewer terms mostrates arguments these cthan of oThese mmcoordinated precludes oestimates nhalf argument effects haveoffail the all not federal of used measurement persons to been growth recognize apolicy. rgument satisfactorily living inoffor the employee its inrfactors educing households relative resolved; benefits, that orimportance. with eliminating affect neither annual andthein _ased households share private older covered the tax of onemployees populations. total insurance Chamber costs withcompensation fragmented of oforhas Commerce employees eachfallen employment benefit. isfigures. with attributable steadily. chronic histories, This process health toSince atyounger least problems) can 1975, only three households, moreover, berecei sources: effective ve and benefits private both if payments, historical demand income Department compensation, (family(those coverage Contributions orprecedent fully greater ofand reporting Commerce /individual the taxable pre-tax of dramatic toBlue less Group indicate employee coverage) compensation. than Cross slowing Health $10,000), /Blue that benefits, to Insurance of$2160 Shield this As employer would low-risk /$864 growth plans. Benefits, tax-deferred pay(a contributions more during plan 9First-dollar percent than participants recent benefits sixincrease years. to times covmajor erage exit and the in salaries) expenditures that are are of two fully types: taxable those (See that Table wouldi).place Legally a ceiling requiredon employer the present levels _ther after special a bonuses, tax capseris vice imposed. awards, suggestions awards, special wage 1/ Private insurance expenditures per person insured for hospita] care. *The views expressed in this statement are those 1960-1981 ......................................... 16 3/ EBRI estimate payments ordered of employer by courts, andcontributions payments to union to stewards.dental insurance premiums, tax-exempt 4/ S.J. Schieber benefitsand hasP.greatly M. George, magnified Retirement the perception Income Opportunties of the tax-base in an 2/ Medicare expenditures per t,ledicare Part A enrollee. 4/ of F_BRIthe estimatewitnesses of Chamber and of Codo nraercenot report necessarily of employer reflect contributions to The distribution of tax burden that would result from limiting the tax-exempt insurance consumers growth the level ofSeveral In of tax-favored coverage have benefits practical contributions paid factors in among terms, benefits an particular, increasing have workers excluded therelative encouraged size certainly and share of from their public to total earnings), ofthe merit dependents most spending expansion compensation. careful health reduces has for of attention care employeer personal promoted the In services, estimated general, from health group wide the _iscounts tax incomes amount position in excess preferences ofless Federal Second, is additional on ofbased merchandise, than the employer's estimates on $15,000 for taxa taxemployer policy substantial than employee (in ofaverage would tax-base 1979) that contributions meals body plan persons would would oferosion costs. furnished research. with dampen have toBecause that income had health private-sector bypri results In v over low-risk company, seeking ate insurance health from $50,000. todemand the payments empoloyees break nsurance isgrowth the The the forfor single-person exemption from of tax-preferred analysts hospital the "standard" ofunderstand care, and benefits employer single-parent in plan, particular, as the health athe fraction distinction insurance households. average hasofbeen total between contributions cost a common compensation of mandated the feature in plan order of versus increased -- employer toand discourage voluntary employer at group an Aging payments erosionAmerica: that include Although canCo contributi beverage use attributed of and ons these Benefit for to tax-favored assumptions FICA, Entitlement unemployment probably and(Washington, tax-exempt compensati introduces benefits. D.C.: onsubstantial insurance, Employee This _rof i t-shari I_g plans. 3/ Medicaid expenditures per Nedicaid recipient (unduplicated count) of an), the views of the Employee Benefit Research Table 5 Simulation of the Effect of Income on the Benefit vision care Research 5/ and EBKIprescription Institute, estimate of 1981), Chamber drugs, ofpp. Con54-55. moving mJerce reportexpenses, of eE_lployer-paid and employee dental education common misperception was recently highlighted by Secretary of the Treasury personal health care services, including hospital care. Institute, its Trustees, members or other staff. _remlu_s, merchandise discounts, employee meals turnlsne_ by compdny, payments Congress. deadlock, of tax care health including tax-favored exclusion relative insurance other hospital EBRIof benefits to is arguments employer privately pleased among care,fail directly workers contributions that toinsured to provide distinguish might out and spending information of support their to pocket. health between suggests dependents. thethat insurance Between revision tax-deferred that will1975 federal assist of reflects Scale tax and benefits the policy preference economies 1981, the Congress flat and the to health potential coverage higher pension care in (iv) effect will the contributions Impact probabl absence on on theyTax ge have of nerosity revenue asany little s proportion employer of and effect coburden. verageoncontribution ofhealth offered compensation care by(see cost employer reflect Table inflation 5). greater groupas In health acontributions expenditures, pay benefits; revenues regressi verage little ve plans. annual Pro that o b impact or fully ability expansion based might for none rate taxed Expansion the ofof on result of taxing ofthe remaining of Chamber versus Private 4.4 cost health by employer inpercent tax 22 health of of Health participants percent Commerce the fa insurance vored plan, contributions insurance Insurance between (see figures. benefits, howe coverage Table -- benefits 1950 Coverage.. ver, will 6). and torates and they health rise. to 1981. are tax-exempt among include indifferent insurance 2The Employers 2workers long-term a broader versus isare and to a Donald workers comprehensive error Regan; into compensation the his coverage May calculation 22, insurance, under 1983 statement employer of and potential agroup to variety ABCplans, revenues, News of smaller and includes those virtually public that the following eliminate any insurance other 5/ O__ cir., p. 41. 4/ Published for figures vision not care available. and prescription drugs, moving expenses, contributions to comment: 3/ The calculation of tax expenditures exaggerates the true revenue loss their dependents, including the growth of family coverage and the _/ Ba-_g-r-oundAnalysis of the Potential Effects of Minimum Universal Pension employee thrift plans and employee education expenditures. Tax-preferred 5/ Average annual cc_npounded growth between 1975 and 1978. contain health care cost inflation might be most effective within the context in That distribution valuating results Estimates benefits extension ofthe from employer areof consequences the over-stated the ofcontributions health tax tax deferral revenues by insurance the of armunt emplloyee of that to pension ofhealth benefits might separation benefit contributions result insurance toorpart-time termination from growth. othe verfor and taxation most payFirst, seasonal selevels veral of our plans. for associated participation their realemployer burden subsidization Ad The with vocates sensitivity health ofin greater hospital employer of ofinsurance higher-risk reduced inclusion ofcare these pension tax borne contributions of revenue pr participants edirectly employees ferences plans. estimates by cite in must inprivate Employer the the thto ebe insurance health modest scarce consumers considered. contributions plan. adjustments literature grouprose have These to by on in Table long addition, vtax-exempt growth tax-deferred ariety 6asof of Sensitivity Medicare periods tax-preferred health benefits. benefits. and care of of unemployment Medicaid Although services, Projected benefits Most this spending analyses however, relati Federal appear distinction vecontinues to Re has and to vhave enues occurred debate total may a tomore not toin compensation largely significant assist rise. recent years projections as Inflation angrowth impact have attempt not is on of in programs. m all likely S--ystem ajor tax argum developed to preferences ebe nt under against bysubstantial forICF, porposals employer Incorporated, pressure health to limitinsurance from for thetheemployees exclusion President's contributions ofwho contributions Commission benefit within from the on at assumptions would be equally hypothetical. The cost of private health received by employees but not distinguishable from other tax-favored benefits reasons. Selected These include Tax Exclusion an implicit Limitsassumption .................... about the marginal 26 tax rates workers; Pension IPolicy think that and when the you Office lookof atPension the wayand our pension Welfare systems, Benefit our Programs medical in the Chamber of Commerce estimates. testimony almost defined-benefit of federal onedeals third spending with pension (see programs. the TAble broad plans 9).issue In movespite ofdirectly employee of with efforts benefits wages; to and curb aserosion the a matter burgeoning of theof th applicable insurance made I0 include e/ rthese elationship Detail the Taxation coverage. distinctions. to impact onfuture 1979 between of ofIttaxation employer employer is retirees likely insurance group on:contributions as that health well e prices ven moderate coverage asand toahealth the misunderstanding periods is degree insurance supported of of unemployment cost-sharing raises byof EBRI the the framework by employer the all 8presented the / employers but FICA level Employee the tax contributions in ofof very base, Table comprehensive the toBenefit highest control proposed 3.it Although isto Research lthe evtax cap an el.health cost reform. reflects important theThe growth of Institute, insurance argume The the their distinction ofrelatively first nttax-favored health have for"Retirement type, pursuing with attracted narrow plans. those employee respect adollar that high Program considerable Cobenefits to veerage "cap" xclusion range general Tax the of of privatel generous (Washington, yDiscretionary systems plan insured D.C., coverage and spending 1981), the employer to p. continue for like 38. hospital contributions are to offer just carethat running and tocoverage. benefits other at full health Atthrottle, inthe the care same Chamber service and time, are of insurance relies, for example, on the package of health benefits offered by i0/ G. R. Wilensky and A. K. Taylor, "Tax Expenditures and Health relationship ta---bulationsbetween of the contributions March 1980 Current and benefit Population payments Survey. in amaturing See: Deborah private J. _xpenditures: A Case of Unsubstantiated, Undocumented, Arbitrary Numbers," 7/ See:increasing Sophie M. year Korczyk, after year, The Federal that sooner Tax or Treatment later they're of Pensions going toand have costs of Medicare and Medicaid, these programs have supported much of the Insurance:The most Limiting important Employer-Paid source ofPremiums," expanding coverage Public andHealth risingReports health pension cost attention alternative has actuarial demanded EBRI (12 been weeks Issue of system. coverage by practice, from Bried, slowing, orhealth consumers, less) those See: N_mber to generate employers possibly participants care seeking Employee 17 and(April services very the intarget new long Benefit in 1983), response relati employer sources pension lapses vis elyp.Research often 4. toin group of contributions abu adjustments health nfederal dantintended health Institute, insurance literatu plans. revenues. toin rto ebethe "Retirement discourage aLow constant coverage co onvThese erage (that the revenues.WeEmployer thank youcontributions for the opportunity to private to appear pensions, today.profit-sharing We stand ready plans to Commerce equivalent exemption limit, emplo Chollet, yer howe data l_ployer-Provided contributions vcompensation of er,represented employer is weak;to for acontributions, 22.9 health Health high employees percent cap insurance, Benefeits: would who ofwould affect wages and leave Coverage, inpute the and only generous weak salaries a all Provisions relationship smallplans employer inproportion 1981. would andbetween Policy health Ofrise this of Deferred employers, Compensati reimbursement on Programs: arrangements Background, made with Issues providers and Options and the (Washingt shortfall on, Program Issues (July-August, (Washington, Tax Expenditures: D.C.: AEmploee Case ofBenefit Unsubstantiated, Research Institute, Undocumented, forthcoming), Arbitrary 1982). 92// "This See:oweek employer Deborah withJ.costs; David Chollet, Brinkley," l_nployer-Privided Show #82, Health Transcript Benefits:(May Coverage, 22, 1983) I__ D.C./ :National EmployeeIncome Benefit and Product Research Accounts, Institute, U.S. forthc Department oming). of Commerce. service demand over the last two decades has been the public sector. Since inflation of aggregate health care costs, and of hospital costs in (_--apter Numbers." P--rovisions proportion I. I_RI and of compensation. Policy Issue Brief, Issues Number Employer (Washington, 17contributions (April D.C.: 1983),Eto mpoloyee p.health 4. Benefit insurance, Research and estimates is, all employee strigent) households havethrift levels and invariably yield plans of avery been do taxnot little cap high represent onand, employer additional based total contributions fed forfeitures on eralassumptions revenues. create of potential ofancontiued hospitalization among provided the relationship assist size indi the of vbiduals yemployer Congress betwee employer when nandgreater an in their health group equivalent its debate dependents cost-shariang insurance plans. with servwhen Modifying ice further contributions can re-employment and be analysis lo the delivered ver tax-exempt and health of does household the innot atax care less provide status treatment income. costly costs.an of with produced of insurance Medicaid increases bycontributions Journal and in Medicare theGraphics, average in reimbursements excess cost Inc. ofNew ofthe aYork, "standard" specified relative N.Y.,to p. cap average. provider 8.as employee costs. earnings. All of amount, nearly two-thirds (60.3 percent) were fully taxable both by FICA EMPLOYEE BENEFIT RESEARCH INSTITUTE Institute, forthcoming). setting. of employee benefits 1920 N Streetand . NVrelated _'lSuile 5201XVissues. a,hinglon. DC 2OO36/Tclephone (2021 659-O670