Employer-Based Health Insurance System Is Best Foundation To Expand Coverage To The Uninsured

Nov 10, 1999

FOR IMMEDIATE RELEASE

November 10, 1999

CONTACT: Richard Coorsh

1-(800)-453-8795

(through 11/10/99)

(202) 824-1787

rcoorsh@hiaa.org

WASHINGTON, DC – According to an article in the November/December edition of Health Affairs, efforts to expand coverage to more Americans should preserve the employer-based foundation because "reforms based on attempts to break the link between employment and health insurance coverage are unlikely to be successful and have the potential to greatly increase the number of Americans who lack health insurance."

The article – entitled "Why We Should Keep the Employment-Based Health Insurance System," written in part by HIAA President Chip Kahn – notes that if the employer tax exclusion for health insurance premiums were to be repealed, 20 million Americans would lose coverage if the employer tax exclusion were repealed.

Employer-based coverage is more efficient than an individually purchased health insurance system because it spreads the risk of catastrophic health care costs over a broad base of people, according to the article. This occurs because economic incentives under an employment-based health insurance system encourage people to enroll in employer group coverage for reasons other than their own anticipated health care costs "Employer-sponsored health plans’ ability to pool risks and influence both the quality and cost of care offers significant administrative efficiencies and results in coverage that costs less than the equivalent individual coverage does," according to the article. Furthermore, the employment-based health insurance system provides the best foundation for expanding health coverage to America’s uninsured because it uses competition in the private market to assure affordable, high-quality health coverage.

Other authors of the article in addition to Mr. Kahn are William S. Custer, Ph.D., associate professor in the Department of Risk Management and Insurance with the College of Business Administration at Georgia State University, and Thomas F. Wildsmith IV, policy research actuary with HIAA.

The Health Insurance Association of America is the nation’s most prominent trade association representing the nation’s private health care system. Its 270 members provide health, long-term care, dental, disability and supplemental coverage to more than 123 million Americans.

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