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E M P L O Y E E B E N E F I T S , C O M P E N S A T I O N
A N D P E N S I O N L A W
Vol. 3, No. 3: February 14, 2002
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Publisher: LSN Subject Matter Journals
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Editor: PAMELA J. PERUN
Urban Institute
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Topic of This Issue:
The Costs of Health
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T A B L E of C O N T E N T S
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NEW and FORTHCOMING ARTICLES
"First, Do No Harm: Designing Tax Incentives for Health
Insurance"
National Tax Journal, Vol. 54, No. 3, pp. 473-493,
September 2001
LEONARD E. BURMAN
Urban Institute
AMELIA GRUBER
Northwestern University
"Sources of Health Insurance and Characteristics of the
Uninsured: Analysis of the March 2001 Current Population Survey"
EBRI Issue Brief, No. 240, December 2001
PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
"Financing Long-Term Care in the United States: Who Should Pay
for Mom and Dad?"
AGING: CARING FOR OUR ELDERS, David N. Weisstub, David C.
Thomasma, Serge Gauthier & George F. Tomossy, eds., Kluwer
Academic Publishers
RICHARD L. KAPLAN
University of Illinois at Urbana-Champaign College
of Law
"Retiree Health Benefits: Trends and Outlook"
EBRI Issue Brief, No. 236, August 2001
PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
WORKING PAPERS
"Taxes and Health Insurance"
JONATHAN GRUBER
Massachusetts Institute of Technology (MIT)
Department of Economics
National Bureau of Economic Research (NBER)
"Learning and the Value of Information: The Case of Health Plan
Report Cards"
MICHAEL CHERNEW
University of Michigan
Department of Economics
National Bureau of Economic Research (NBER)
GAUTAM GOWRISANKARAN
University of Minnesota
Department of Economics
National Bureau of Economic Research (NBER)
DENNIS P. SCANLON
Pennsylvania State University
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N E W and F O R T H C O M I N G Articles
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"First, Do No Harm: Designing Tax Incentives for Health
Insurance"
National Tax Journal, Vol. 54, No. 3, pp. 473-493,
September 2001
BY: LEONARD E. BURMAN
Urban Institute
AMELIA GRUBER
Northwestern University
Contact: LEONARD E. BURMAN
Email: Mailto:lburman@ui.urban.org
Postal: Urban Institute
2100 M Street, NW
Washington, DC 20037 USA
Phone: 202-261-5248
Co-Auth: AMELIA GRUBER
Email: not available
Postal: Northwestern University
2001 Sheridan Road
Evanston, IL 60208 USA
ABSTRACT:
A bipartisan consensus favors public policy initiatives to
expand health insurance coverage. This paper summarizes new
Current Population Survey (CPS) data on health insurance
coverage for the non-elderly and discusses the issues involved
in subsidizing health insurance. We outline a tax credit option
designed to diminish many health insurance market flaws. A
simple model illustrates that the Administration's recent
proposal for tax credits for nongroup insurance alone is
equivalent to a general insurance tax credit (our preferred
option) with a tax on employer-sponsored insurance (ESI). Thus,
it runs the risk of doing harm - undermining the insurance that
currently covers most nonelderly Americans.
______________________________
"Sources of Health Insurance and Characteristics of the
Uninsured: Analysis of the March 2001 Current Population Survey"
EBRI Issue Brief, No. 240, December 2001
BY: PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=296989
Contact: PAUL FRONSTIN
Email: Mailto:fronstin@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 USA
Phone: 202-775-6352
Fax: 202-775-6312
Paper Requests:
Contact Alicia Willis at Mailto:publications@ebri.org, or 2121 K
St., NW, Suite 600, Washington, DC 20037-1896.
Phone:(202)572-7422, Fax:(202)775-6312. Full-Text downloads are
available from SSRN Online for $7.50.
ABSTRACT:
Between 1999 and 2000, the percentage of Americans with health
insurance increased: 84.1 percent of nonelderly Americans were
covered by some form of health insurance in 2000, up from 83.8
percent in 1999. The percentage of nonelderly Americans without
health insurance coverage declined from 16.2 percent in 1999 to
15.9 percent in 2000, continuing a trend that started between
1998 and 1999. The main reason for the decline in the number of
uninsured Americans was the strong economy and low unemployment.
Between 1999 and 2000, the percentage of nonelderly Americans
covered by employment-based health insurance increased from 66.6
percent to 67.3 percent, continuing a longer-term trend that
started between 1993 and 1994. Even though the number and
percentage of uninsured declined substantially between 1998 and
2000, more than 38 million Americans remain uninsured. While an
increasing percentage of Americans were being covered by
employment-based health plans, this trend may not continue
because of the combined re-emergence of health care cost
inflation and the weak economy. As long as the economy is strong
and unemployment is low, employment-based health insurance
coverage will expand and the uninsured will decline gradually.
However, the combination of the current weak economy and the
rising cost of providing health benefits will likely result in
more Americans without health insurance coverage. Should the
uninsured remain unchanged and continue to represent 15.9
percent of the nonelderly population, 40 million would be
uninsured by 2005. If the uninsured represented 25 percent of
the population, 63 million would be uninsured in 2005 and 65
million nonelderly Americans would be uninsured by 2010.
Keywords: Employment-based benefits, Health insurance
coverage, Uninsured
JEL Classification: I1, J3
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"Financing Long-Term Care in the United States: Who Should Pay
for Mom and Dad?"
AGING: CARING FOR OUR ELDERS, David N. Weisstub, David C.
Thomasma, Serge Gauthier & George F. Tomossy, eds., Kluwer
Academic Publishers
BY: RICHARD L. KAPLAN
University of Illinois at Urbana-Champaign College
of Law
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=294056
Paper ID: Illinois Public Law Research Paper No. 00-14
Contact: RICHARD L. KAPLAN
Email: Mailto:rkaplan@law.uiuc.edu
Postal: University of Illinois at Urbana-Champaign College of Law
504 East Pennsylvania Avenue
Champaign, IL 61820 USA
Phone: (217) 333-2499
Fax: (217) 244-1478
Paper Requests:
Contact Pat Estergard at Mailto:pesterga@law.uiuc.edu Postal:
324 Law Building, MC 594, 504 E. Pennsylvania, Champaign, IL
61820, Phone: 2l7-333-9853.
ABSTRACT:
This article considers the legal framework that applies when
older adults need long-term care in the United States. The
financial aspects of this phenomenon hit almost all affected
families as an unexpected crisis, because long-term care
generally falls outside the purview of Medicare, the
government's health care program for older Americans. After
families discover this reality, they often look to Medicaid, the
government's health care program for poor people of any age, but
this program has severe problems of access to quality
facilities, and its financial eligibility criteria preclude
coverage of most elders. The article then analyzes some
impediments to obtaining Medicaid coverage of long-term costs,
including questions of legal capacity to undertake asset
divestment, ineligibility penalties imposed on uncompensated
transfers, and mandatory recovery from the estates of Medicaid
recipients. The article then turns to private long-term care
insurance as a possible response to this dilemma. The article
considers recent tax changes that were intended to promote the
purchase of this insurance, but finds that these benefits are
often illusory and that regulation of such policies is still
needed to facilitate informed comparison shopping. Finally, the
article examines why the financing of long-term care costs
should be a private responsibility at all, especially when the
financing of acute care costs has been socialized via the
Medicare program.
______________________________
"Retiree Health Benefits: Trends and Outlook"
EBRI Issue Brief, No. 236, August 2001
BY: PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=282590
Contact: PAUL FRONSTIN
Email: Mailto:fronstin@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 USA
Phone: 202-775-6352
Fax: 202-775-6312
Paper Requests:
Contact Alicia Willis at Mailto:publications@ebri.org, or 2121 K
St., NW, Suite 600, Washington, DC 20037-1896.
Phone:(202)572-7422, Fax:(202)775-6312. Full-Text downloads are
available from SSRN Online for $7.50.
ABSTRACT:
Financial Accounting Statement No. 106 (FAS 106), approved by
the Financial Accounting Standards Board in 1990, required most
private companies to significantly alter the way they accounted
for their retiree health benefits beginning with fiscal years
after Dec. 15, 1992. FAS 106 dramatically impacts a company's
calculation of its profits and losses and thereby creates a
strong incentive for financial managers to limit expenses.
As a result of FAS 106, and the increasing cost of providing
retiree health benefits in general, many employers began a major
overhaul of their retiree health benefit programs. Some
employers placed caps on what they were willing to spend on
retiree health benefits. Some added age and service
requirements, while others moved to some type of "defined
contribution" health benefit. Some completely dropped retiree
health benefits for future retirees, while others dropped
benefits for current retirees, although this happened less
frequently than the other changes. Despite FAS 106, most
55-64-year-olds are covered by some form of health insurance.
However, since 1994, the percentage of persons ages 55-64
without health insurance generally has been increasing.
While the changes employers have made to retiree health
benefits do not appear to be having much impact on current
retirees, they are likely to be felt most by future retirees who
are not yet or may never become eligible for retiree health
benefits because the courts have ruled that an employer has a
right to terminate or amend retiree health benefits only if it
has proved that such a right has been reserved or stated in
specific language and on a widely known basis.
Another round of changes may take place in the near future,
possibly further reducing or limiting the availability of
retiree health benefits. Employers are likely to respond to the
renewed surge in health benefit costs as well as recent court
rulings regarding retiree health benefits and age discrimination
and potential federal legislative initiatives that would make it
more costly for employers to offer retiree health benefits. This
paper documents these trends.
Keywords: Employment-based benefits; FAS 106; Health care
costs; Health care policy; Health insurance coverage; Retiree
health benefits
JEL Classification: J32, M41, M44
______________________________
W O R K I N G P A P E R Abstracts
_________________________________________________________________
"Taxes and Health Insurance"
BY: JONATHAN GRUBER
Massachusetts Institute of Technology (MIT)
Department of Economics
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=294095
Paper ID: NBER Working Paper No. W8657
Date: December 2001
Contact: JONATHAN GRUBER
Email: Mailto:gruberj@mit.edu
Postal: Massachusetts Institute of Technology (MIT)
Department of Economics
Room E52-355
50 Memorial Drive
Cambridge, MA 02142 USA
Phone: 617-253-8892
Fax: 617-253-1330
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
A common prescription for reducing the number of uninsured is to
increase the tax subsidization of health insurance in the U.S.
Yet, we already provide over $100 billion per year in tax
subsidies to health insurance. This paper provides an assessment
of the past and potential impacts of taxation on health
insurance coverage and costs. I begin by reviewing the central
facts on health insurance and taxation. I then provide a
framework for assessing the impacts of tax policies on health
insurance coverage and costs, and I review the existing
empirical evidence on the key behavioral parameters required to
model these impacts. I conclude with the policy implications of
these findings for tax policies to expand insurance coverage.
JEL Classification: H2, I1
______________________________
"Learning and the Value of Information: The Case of Health Plan
Report Cards"
BY: MICHAEL CHERNEW
University of Michigan
Department of Economics
National Bureau of Economic Research (NBER)
GAUTAM GOWRISANKARAN
University of Minnesota
Department of Economics
National Bureau of Economic Research (NBER)
DENNIS P. SCANLON
Pennsylvania State University
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=290392
Paper ID: NBER Working Paper No. W8589
Date: November 2001
Contact: GAUTAM GOWRISANKARAN
Email: Mailto:gautam@econ.umn.edu
Postal: University of Minnesota
Department of Economics
1035 Management and Economics
271 19th Avenue South
Minneapolis, MN 55455 USA
Phone: 612-625-8310
Fax: 612-624-0209
Co-Auth: MICHAEL CHERNEW
Email: Mailto:mchernew@umich.edu
Postal: University of Michigan
Department of Economics
611 Tappan Street
Ann Arbor, MI 48109-1220 USA
Co-Auth: DENNIS P. SCANLON
Email: Mailto:dpscanlon@psu.edu
Postal: Pennsylvania State University
Department of Health Policy & Administration
University Park, PA 16802 USA
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
We estimate a Bayesian learning model in order to assess the
value of health plan performance information and the extent to
which the explicit provision of information about product
quality alters consumer behavior. We take advantage of a natural
experiment in which health plan performance information for HMOs
was released to employees of a Fortune 50 company for the first
time. Our empirical work indicates that the release of
information affected health plan choices. Consumers were willing
to pay an extra $276 per year per below average rating avoided,
and the average value of the information per employee was $22
per year. The priors on quality and the quality ratings have a
correlation of 0.14 that is statistically significant. The
results suggest that despite the existence of a variety of
informal mechanisms to convey information, including reputation,
consumers may value formally constructed performance measures.