State Insurance Regulation and Employers' Decisions to Self-Insure (original) (raw)
State mandated benefits and the small firm's decision to offer insurance
Journal of Regulatory Economics, 1992
In the last decade, the number of Americans without health insurance has grown, partly due to an erosion in employer-based coverage among workers. This paper examines the extent to which state-mandated benefit requirements and other state in surance regulations discourage small firms in the private sector from providing health benefits. Using data on 1320 firms observed in 1985 and 492 finns observed in 1988, we estimate two models of small firms' decisions to offer health insurance (one for each data set), and then use them to assess the effects that mandates had on purchasing decisions in bc~h years. We estimate that 19 percent of noncoverage among sample businesses in 1985 and 43 percent of noncoverage in the 1988 sample was attributable to state-mandated benefits. State continuation-of-coverage requirements were particularly burdensome for firms. With continued growth in the number of state mandated benefit requirements, we should expect a steady rise in the small firm's propensity to forgo insurance coverage.
Self-employment and the role of health insurance in the U.S
Journal of Business Venturing, 2014
We investigate the effect of health insurance on labor market transitions in and out of selfemployment as well as on the likelihood of being self-employed. We consider the role of individual health insurance coverage along with that from a spouse. Next, we examine a series of tax deductions granted to the self-employed through amendments made to the 1986 Tax Reform Act. Using data from the Current Population Survey for 1996-2007, we find significant but small effects of the after-tax health insurance premium on the entry rate, with no effect on exits from self-employment or the likelihood of being self-employed.
2000
Americans under the age of 65 depend on employers for their health insurance coverage more than any other source. Despite mounting rhetoric that employer-based coverage is rapidly disintegrating, nearly all large firms in the United States continue to offer health benefits to their employees. But there are key weaknesses in employer-provided coverage. These weaknesses, exacerbated by rising health care costs, have fueled the relentless rise in the number of people without comprehensive health insurance-now 47 million people, not counting the estimated 16 million adults who are underinsured.
A Reappraisal of Private Employers' Role in Providing Health Insurance
New England Journal of Medicine, 1999
In 1996, according to official figures, 61 percent of Americans received health insurance through employers. However, this estimate includes persons who relied primarily on government insurance such as Medicare, workers whose employers arranged their insurance but contributed nothing toward the premiums, and government employees whose private coverage was paid for by taxpayers. To estimate the number of persons whose principal health insurance was paid for in whole or in part by employers in the private sector and the number receiving government-funded insurance, we analyzed data from the March 1997 Current Population Survey. Approximately 130,000 persons representative of the noninstitutionalized U.S. population were sampled. We considered people to be covered principally by health insurance paid for by private-sector employers if they had no public insurance coverage and were covered by insurance from a non-governmental employer who paid all or part of their premiums. Those who were covered by Medicaid, Medicare, insurance resulting from former or current military service, or the Indian Health Service were considered to be receiving government insurance. In 1996, 43.1 percent of the population (90 percent confidence interval, 42.7 to 43.5 percent) depended principally on health insurance paid for by private-sector employers, 34.2 percent (90 percent confidence interval, 33.8 to 34.6 percent) had publicly funded insurance, 7.1 percent (90 percent confidence interval, 6.8 to 7.6 percent) purchased their own coverage, and 15.6 percent (90 percent confidence interval, 15.3 to 15.9 percent) were uninsured. In only six states was more than half the population covered principally by health insurance paid for by private-sector employers. Current definitions of health insurance overemphasize the role of private employers and underestimate the extent to which government pays for health insurance.
Cost Sharing and the Changing Pattern of Employer-Sponsored Health Benefits
The Milbank Quarterly, 1987
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Market Insurance versus Self Insurance: The Tax-Differential Treatment and Its Social Cost
The Journal of Risk and Insurance, 1991
Much resources have been expended over the years debating the tax treatment of insurance versus self insurance. This article reviews and analyzes the principal concepts and inconsistencies that have evolved in dealing with the issue of premium tax deductibility. The Internal Revenue Service considers market insurance as the only visible means of risk shifting and therefore the only one worthy of tax deductibility. It is argued that other forms of risk reduction can be equally effective in reducing risk. The social cost associated with the present tax policy that favors market insurance over other forms of pre-loss risk financing are evaluated and depicted. The implicit objective of the article is to'shift the debate by refocusing on the question of an appropriate tax policy concerning risk financing, one that maximizes social welfare. On July 27, 1989, the U.S Court of Appeals of the Sixth Circuit Court rendered its decision in the case of Humana Inc. versus Commissioner (No. 88-1403), upholding the lower court's decision that premiums paid by a parent company to its captive insurance subsidiary shall not be deductible for income tax purposes. The same court reversed the decision with regard to premiums paid by an affiliated subsidiary to a captive, allowing their deductibility. The underlying principle is based on appearance rather than economic substance. Later dubbed "the balance sheet theory," the guiding principle is the effect of the premium on the insured's consolidated balance sheet figure. If the premium is paid to a captive, there is no direct effect on the consolidated balance sheet of the parent and the wholly owned captive, there is no risk shifting, and therefore the expense is not recognized. In contrast, if the premium is paid by a subsidiary, who may insure itself with the same captive,
Individual insurance: health insurers try to tap potential market growth
Research brief, 2009
Individual insurance is the only source of health coverage for people without access to employer-sponsored insurance or public insurance. Individual insurance traditionally has been sought by older, sicker individuals who perceive the need for insurance more than younger, healthier people. The attraction of a sicker population to the individual market creates adverse selection, leading insurers to employ medical underwriting--which most states allow--to either avoid those with the greatest health needs or set premiums more reflective of their expected medical use. Recently, however, several factors have prompted insurers to recognize the growth potential of the individual market: a declining proportion of people with employer-sponsored insurance, a sizeable population of younger, healthier people forgoing insurance, and the likelihood that many people receiving subsidies to buy insurance under proposed health insurance reforms would buy individual coverage. Insurers are pursuing sev...