Phyllis Borzi

Who should determine when health care is medically necessary

In the United States there has been a radical shift in the power to determine when health care is medically necessary and therefore covered by insurance. From the 1950s through the late 1970s, phys...

The Current State of Employment‐Based Health Coverage

ShemyA. Glied Phyllis C. Borzi merican policymakers and health policy analysts have a lovehate relationship with job-based health insurance. The policy A ress routinely runs articles about the demise of the current system of voluntary employer-sponsored health insurance coverage.’ Conservatives argue that it ought to be replaced with individuallypurchased insurance, such as tax-favored spending accounts (see Mark Pauly’s article this issue). Liberals assert that government insurance ought to supplant it. Meanwhile, as the debate rages on about the future of employer coverage, states and the federal government pass legislation buttressing and building on the existing employment-based system. Most recently, California has passed an employer mandate requiring employers to cover their workers (and many other states have contemplated similar legislation) and Maine has adopted a universal coverage initiative that includes avoluntary small employer insurance program offered through a state agency (Dirigo Health Care). Congress, in its recent Medicare reform legislation, not only extended publicly-financed prescription drug benefits to elderly Americans but also offered employers tax incentives to keep providing the prescription drug benefits they offer to their retirees2 There is nothing new about this debate, nor the conflict in views it represents. Since its origins in the 1930s, employment-based coverage has been viewed with skepticism. Nonetheless, nearly three-quarters of a century later, the vast majority of Americans under 65 who have health insurance, and about 38 percent of those 65 and older who continue to hold private health insurance coverage supplemental to Medicare, obtain it through their current jobs (or in the case of retired workers, former jobs)? The model of privately-sponsored and voluntary employment-based coverage is hardly anyone’s ideal of health system design, but it is a nearly unanimous second choice.

Allowing small businesses and the self-employed to buy health care coverage through public programs.

The large number of uninsured working Americans and the extent of public support enjoyed by employment-based health insurance argues for a coverage initiative that fosters access to affordable benefits through employment. This proposal, which reflects models in both Massachusetts and Michigan, entails the development of publicly organized and subsidized group health insurance for small firms with low-wage workers. States would provide overall administration and subsidies to both employers and employees. Employers would enroll workers, select insurers, pay premiums, and report data on employment status. The program would be a legislative extension of the State Childrens Health Insurance Program (SCHIP), with federal financing to participating states at each respective SCHIP rate. Anti-crowd-out provisions would be included. This program is both administratively and politically feasible. It is also consistent with current thinking regarding public/private partnerships and the desirability of preserving a voluntary employer-sponsored health insurance system.