Health Affairs, 25, no. 6 (2006): 1567 doi: 10.1377/hlthaff.25.6.1567 © 2006 by Project HOPE	New Online   House Health Reform Bill   Paying for Reform   Vetting AHIP's Report   HIV/AIDS Costs   Brief: Insurance Reform   HA Blog Top 10

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Policy

PROLOGUE

Policy Initiatives For Employer-Sponsored Health Insurance

First, Thomas Selden and Bradley Gray examine the workings of the federal tax system as it subsidizes employer coverage. The two economists detail how the current system disproportionately favors large firms and their workers. Small employers and their low-income workers face ever-growing premiums and reduced benefit packages, so perhaps it is not surprising that under these conditions, employer coverage is shrinking. If one is looking to the current tax system for help in shoring it up, one is probably looking in the wrong place. As currently constituted, Selden and Gray say, employer coverage is a poor tool to use in providing coverage for all workers.

If the current system is a poor tool, then what should we be using instead? The most broad-reaching, creative attempt to rehabilitate employer coverage comes not from the federal government but from the Massachusetts reform passed in April 2006. Edmund Haislmaier and Nina Owcharenko of the Heritage Foundation assess this reform using a systemwide approach, noting that Massachusetts used the products of employer coverage but broke down the barriers transforming insurance into products sold to individuals, rather than to discrete groups of workers, making it portable and affordable. They ask the reader, Can this be done elsewhere? They also evaluate other state reforms that have used some of the features of the Massachusetts initiative.

The paper by Mila Kofman and colleagues starts with employer coverage as the basis of the U.S. health insurance system and looks at complementary reforms and legislation supported by the current administration, which would help extend coverage to small businesses and provide better incentives for both eliminating waste and pursuing individual choice. Kofman and her associates at Georgetown University review the tortuous history of association health plans and detail the myriad state regulations and mandates they are subject to. They also raise the caution flag: Association health plans are known for their long history of scams and high risk of insolvency. Any extension of these plans needs to ensure that consumers and businesses are adequately protected.

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