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Caution Urged Before Abandoning Employer Health Coverage in Favor of Individual Coverage
Health AffairsArticle Examines Strengthening the Individual Health Insurance Market Before Jettisoning Employment-Based Health Coverage
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Ginsburg notes that a slow decline in the proportion of Americans with employer-based health coverage has fueled concerns about the future role of employers in providing coverage-Census data show that 59.7 percent of the U.S. population had employer coverage in 2006, compared with 62.8 percent in 1999, a year at a similar stage in the economic cycle.
At the same time, "most recognize that todays individual market is not an attractive alternative to employer-sponsored coverage. The presence of underwriting based on medical history and age would make insurance unaffordable for many who now obtain coverage through employment," Ginsburg writes in the article, titled "Employment-Based Health Benefits Under Universal Coverage."
Regional insurance exchangesmarketplaces managed by government or a private entity operating under governmentestablished rules where individuals choose coverage offered by competing carriers-potentially could create pooling mechanisms similar to those available to people with employer coverage, according to the article.
But for an insurance exchange to succeed and pool people with different risks of having high medical expenses, "it needs a mechanism to ensure that both sick and healthy people enroll. As part of a universal coverage program, the federal government could accomplish this by offering the extensive tax benefits of purchasing health insurance only to those purchasing through the designated exchange for their region. Without such incentives, the healthiest people are likely to obtain coverage outside of the exchange, threatening it with an adverse-selection spiral. To date, I have seen little public understanding of this issue on the part of political leaders advocating a larger role for individual insurance," Ginsburg writes.
While insurance exchanges have promise, Ginsburg writes, "
is premature to abandon employer-based coverage with a strategy that is so untested
in the real world. At this point, insurance exchanges are, for the most part,
an attractive concept developed by thought leaders. Many design issues will
have to be thrashed out in the policy process, and many operational problems
are likely to be encountered and will need to be worked through. It would be
better to do this learning with the tens of millions of people without access
to employer-based coverage than with the entire privately insured population."
The Center for Studying Health System Change is a nonpartisan policy research organization committed to providing objective and timely research on the nations changing health system to help inform policy makers and contribute to better health care policy. HSC, based in Washington, D.C., is funded principally by the Robert Wood Johnson Foundation and is affiliated with Mathematica Policy Research, Inc.