May 2000 Policy Forum

The Economic Costs of the Uninsured:
Implications for Business and Government

An EBRI-ERF Policy Forum
May 3, 2000
Arnold and Porter Conference Center
Washington, DC
9:00 a.m. to 4:00 p.m.

Employers in both the private sector and the public sector are the dominant source of health insurance for nonelderly individuals in the United States, providing coverage for nearly two-thirds of this population in 1998.  Employers offer health benefits to promote health, to increase worker productivity, and as a form of compensation to recruit and retain qualified workers.   Workers and their families benefit by being provided protection from financial losses that can accompany unexpected serious illness or injury.  They also benefit by having access to the health care delivery system.

Employers offer health insurance on a voluntary basis.  With the exception of Hawaii, states are pre-empted from mandating that employers provide health insurance to workers.  Because employers are not legally required to provide health insurance to workers and individuals are not required to maintain coverage, some segments of the working population will have coverage while others will not.  While 18 percent of all workers are uninsured, there are large differences between workers in small and large firms because virtually all large employers offer health insurance, while many small employers do not.   Twelve percent of workers employed in firms with 100 or more employees were uninsured in 1998, compared to 27 percent of workers in firms with less than 100 employees.

Roughly 85 percent of the 44 million uninsured Americans are in a family with a working adult.  As a result, the employment-based health insurance system has been criticized as failing to provide health insurance coverage to all Americans.   Critics often suggest that the employment-based health insurance system should be replaced with an individual-based system.  The fact that there are really two employment-based systems - one for small employers and one for large employers - is often not recognized.  Integration of these systems may go a long way towards improving the health care delivery system, and may have far reaching effects on the U.S. economy.

It has been argued that all Americans pay for the cost of caring for the uninsured through cost shifting.  All Americans may pay for it through taxes.  Insured Americans may pay for it through higher premiums, and businesses may pay for it through diminished organizational effectiveness.  While cost shifting may have declined in the last few years, it may mean that less money is available to care for the uninsured.  Ultimately, all Americans may pay for the uninsured, as the opportunity cost of an uninsured population is lost economic value in the U.S. economy. 

Should employers be concerned about the uninsured population?   Do employers add value by being involved in the purchase of health care for workers and their families?  What are the private sector and the public sector doing to increase access to health insurance coverage?  Are there adverse consequences of driving employers out of the health care delivery system?  Are the short-run and long-run costs to society in terms of resource consumption and economic opportunity higher or lower than the cost of universal coverage?  How can the employment-based health insurance system be sustained, and should it be?

These are some of the questions that will be addressed at the EBRI-ERF Policy Forum on the economic costs of the uninsured.  Virtually no research has been done connecting health insurance status to the performance of the economy.  However, a small number of studies have started to put together a link between population health, productivity, and economic output.  This research has implications for consumers, business, government, and the economy, and also suggests that the cost of universal coverage should not be measured simply in terms of the cost of covering the uninsured, but also in terms of the opportunity cost of diminished economic opportunities.

I.  Welcome and Introduction

This panel will provide the framework for the forum.  An overview of the employment-based health insurance system, trends in health benefits, and uninsured workers will be presented.  A presentation on the future of employment-based coverage and the uninsured will be made, followed by a presentation on the evolving employer role in the current health care financing and delivery system and the consequences of breaking the connection between employers and the health care delivery system.


Dallas Salisbury, Employee Benefit Research Institute
Paul Fronstin, Employee Benefit Research Institute
Greg Acs, The Urban Institute
Ray Werntz, Consumer Health Education Council

II. The Economic Costs of the Uninsured

This panel will examine the link between health insurance coverage, health status, and productivity.


Alphonse G. Holtmann, University of Miami
Edward Yelin, University of California, San Francisco
Dee Edington, University of Michigan

 III.   Private and Public Sector Initiatives to Increase Access to Health Coverage

This panel will examine private employer and public sector initiatives to expand access to private health insurance plans.


Stephen Adams, Initiative for a Competitive Inner City
Deena Robben, American Century Investments
Chris Queram, Employer Health Care Alliance Cooperative
Mark Gibson, Office of the Governor of Oregon
John Colmers, Maryland Health Care Commission

IV.   The Influence of Business and Labor on the Delivery of Health Care and Population Health

This panel will examine the influence of large employers and unions on the organization of the delivery system.  It will document how large employers and unions have worked together to help small employers purchase health care.  It will also document the current state of "value" purchasing.  The panel will also examine how employer and union influence over the delivery system has affected population health.


David Hirschland, United Auto Workers
Gary Pheley, General Motors
Irene Fraser, Agency for Healthcare Research and Quality

V. Options to Enhance the Employment-Based Health Insurance System

This panel will discuss various options to build upon the employment-based system to increase health insurance coverage.


Lisa Duchon, The Commonwealth Fund
Sherry Glied, Columbia University
Jack Meyer, Economic and Social Research Institute
Mark Merlis, Institute for Health Policy Solutions
Vernon Smith, Health Management Associates


Revised April 26, 2000