Severing the Link Between Health Insurance and Employment

EBRI Policy Forum Proceedings, 1999
ISBN 0-86643-093-8
Paperback, 142 pp.
PDF, 587 kb
Employee Benefit Research Institute, © 1999

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Executive Summary

Health insurance in the United States is tied to employment: Two-thirds of all those under age 65, amounting to 151.7 million Americans, currently get their health care coverage through an employer. Health insurance is the benefit most used and valued by workers and their families, surveys show.

This voluntary "employment-based" health insurance system offers workers and their families benefits that typically are not found in the individual market-But it exacts a price from the self-employed and those who must buy coverage outside of the employment-based system. The most visible disadvantage with the voluntary system of health insurance, however designed, is the 43 million Americans who have no health insurance: About 18 percent of the U.S. population is uninsured because their jobs do not provide health care coverage or they have declined the coverage that is offered.

Some policymakers and interest groups would address this issue by severing the link between health insurance and employment, through changes in the tax treatment of health insurance. But what would happen if the link between employment and health benefits were broken: Would fewer Americans be covered by private health insurance? Would the number of uninsured fall-or rise? Would "adverse selection" transform the economics of health insurance and ultimately drive the market into a "death spiral" of ever-increasing health insurance premiums? Would the government's role be reduced, or would taxes and regulation grow?

More than a hundred leaders of the health care industry, the benefits sector, unions, employers and legislators examined these questions during the Employee Benefit Research Institute-Education and Research Fund's May 5, 1999, policy forum on "Severing the Link Between Health Insurance and Employment." The papers contained in this book explore in detail the link between health insurance and employment, how various federal policies might put that link at risk, and what the implications of those policies might be for workers, employers, and the government.

Severing the Link Between Health Insurance and Employment provides the most comprehensive review available today of the possible implications of changing the tax system as it applies to employment-based and individual health insurance.