Health insurance portability: COBRA expansions and job mobility

This Issue Brief discusses continuation-of-coverage mandates under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). It provides background information on health insurance portability and job mobility, data on the cost to employers of providing continuation of coverage to former employees, and a summary of empirical research on COBRA's effect on employee benefits and job mobility. COBRA coverage can be considered advantageous for most workers, as it allows continuation of the health insurance policy they had in place at work when they lose or leave a job. Although employees can be required to pay 102 percent of the premium for COBRA coverage, they can usually realize significant savings compared with the cost of purchasing the equivalent insurance policy in the private market. Many employers consider COBRA to be a costly mandate for three reasons. First, premiums collected from COBRA beneficiaries typically do not cover the costs of the health care services rendered. Second, COBRA imposes an additional administrative cost on employers. Third, many employers view the penalties for noncompliance as excessively large. According to a survey conducted by Charles D. Spencer & Associates, of the 10.2 percent of employees and dependents who were eligible for COBRA coverage in 1996, over 28 percent elected it. In addition, average employer claims costs for COBRA beneficiaries amounted to $5,591, compared with $3,332 for active employees in surveyed plans. According to Employee Benefit Research Institute estimates of the Survey of Income and Program Participation (SIPP), the COBRA population is much older than the general insured population. COBRA beneficiaries also have higher personal income than the general insured population, with this difference being almost entirely due to differences in retirement income. Any attempt to expand COBRA coverage, either through subsidies or by allowing workers to choose from plans with lower premiums, would likely result in increased employer health care costs. As a result, employers may consider various alternatives to reduce, shift, or eliminate the impact of this increased cost. One alternative would be to continue requiring active employees to share in the increased costs through higher employee contributions. A second alternative would be to reduce or eliminate health care benefits for active employees and/or future retirees and their families. A third alternative would be to reduce the size of the work force eligible for health insurance benefits. Finally, employers may pass additional costs on to workers or consumers.     

Employer‐Supported Child Care: Who Participates?

Child‐care vouchers are becoming more common and can provide child‐care assistance to a wide spectrum of the population. There is little empirical research, however, on which workers participate in their employer's child‐care programs. In this exploratory study, employees with children at 1 large university completed questionnaires to gather information on their child‐care arrangements and their experience with the employer's child‐care voucher program (N = 949). Results indicate that the employees who were most in need of child‐care assistance in terms of family structure, job type, and child‐care expenses were more likely to receive vouchers. Federal policy limiting the structure of employer‐sponsored voucher programs appeared to present barriers to participation for certain groups of employees.     

ECONOMICS COURSEWORK AND LONG‐TERM BEHAVIOR AND EXPERIENCES OF COLLEGE GRADUATES IN LABOR MARKETS AND PERSONAL FINANCE

Using survey data from over 2,000 students who attended one of four large public universities in 1976, 1986, or 1996, we investigate the relationship between taking more coursework in economics, or choosing economics as an undergraduate major, and a wide range of later decisions and outcomes in labor markets and personal finance, many of which have not been analyzed in earlier research. Generally, economics coursework and majoring in economics are significantly related to higher levels of earnings, home equity, and savings. They are also associated with working more hours and negatively related to completing graduate degrees (except the MBA). Among graduates with positive savings, those with more economics coursework invest more in individual stocks and money market accounts, and are more likely to have employer‐provided life insurance. They have fewer credit cards, which are more often paid in full each month. Most of these findings also hold for graduates who majored in business, but on average economics majors worked more hours and earned more than business majors, were more likely to have been self‐employed, and expected to retire at an older age. Business majors were more likely to have experienced a layoff, and were even less likely than economics majors to complete graduate degrees (except the MBA). Economics majors expected to save even more than business majors by retirement, and viewed short‐term and precautionary motives for saving as more important. Finally, our results suggest that exposure to economics through course‐taking is more important for later outcomes than actual performance in those courses. (JEL A22, J3, D12)     

DIFFERENTIAL DEPOSIT GUARANTEES AND THE EFFECT OF MONETARY POLICY ON BANK LENDING

This paper utilizes differences in de jure deposit insurance coverage across banks and changes in coverage over time to identify a bank‐lending channel in Poland. Banks with partial guarantees have a stronger loan response to monetary policy than banks with full guarantees. Furthermore, the weak response of the fully guaranteed banks is attributed to their ability to raise low‐reserve, uninsured time deposits relative to the partially covered banks. When differential coverage is eliminated, there is no disparity in the loan response between the two groups. This lending channel has implications for credit control and financial system development in emerging markets. (JEL E52, G21, G28)     

Healthcare for the uninsured: is mandation the answer?

The 37 million people in the United States who have no healthcare insurance pose a major social problem, but is legislation that requires employers to provide a minimum amount of healthcare coverage for employees the solution?     

TAXPAYER WILLINGNESS TO PAY FOR HEALTH INSURANCE REFORM: A CONTINGENT VALUATION ANALYSIS

A key criterion for evaluating policies to expand health insurance coverage is weighing the costs of such policies against the willingness of the public to pay for coverage expansions. We use new panel survey data from New York State to estimate residents' willingness to pay (WTP) to expand public insurance coverage. Using a nonparametric double‐bounded contingent valuation (CV) approach, we specifically ask residents about their WTP to reduce the rate of uninsurance in the state. Our results imply an aggregate lower‐bound WTP of over $2,800 per year to cover one person. We also analyze heterogeneity in WTP by sub‐group and changes in individual WTP over time between 2008 and 2010. We find that a large majority of residents are willing to pay additional taxes to reduce the number of uninsured in the state, and that average WTP remained remarkably stable despite the economic downturn and the politically polarized discussions surrounding the Affordable Care Act. Decomposing the changes in individual WTP, we find that economic factors related to the recession, including changes in income and employment status, cannot explain changes in individual WTP, whereas individual changes in political opinions about health insurance reform between 2008 and 2010 are strongly correlated with changes in WTP. (JEL H20, H42, H51, H75, I13)     

Expanding health insurance for children: examining the alternatives

This Issue Brief examines the issue of uninsured children. The budget reconciliation legislation currently under congressional consideration earmarks $16 billion for new initiatives to provide health insurance coverage to approximately 5 million of the 10 million uninsured children during the next five years. Proposals to expand coverage among children include the use of tax credits, subsidies, vouchers, Medicaid program expansion, and expansion of state programs. However, these proposals do not address the decline in employment-based health insurance coverage--the underlying cause of the lack of coverage, to the extent that a cause can be identified. What is worse, some proposals to expand health insurance among children may discourage employers from offering coverage. Between 1987 and 1995, the percentage of children with employment-based health insurance declined from 66.7 percent to 58.6 percent. Despite this trend, the percentage of children without any form of health insurance coverage barely increased. In 1987, 13.1 percent were uninsured, compared with 13.8 percent in 1995. Medicaid program expansions helped to alleviate the effects of the decline in employment-based health insurance coverage among children and the potential increase in the number of uninsured children. Between 1987 and 1995, the percentage of children enrolled in the Medicaid program increased from 15.5 percent to 23.2 percent. Some questions to consider in assessing approaches to improving children's health insurance coverage include the following: If the government intervenes, should it do so through a compulsory mechanism or a voluntary system? Is the employment-based system "worth saving" for children? In other words, are the market interventions necessary to keep this system functioning for children too regulatory, too intrusive, and too cumbersome to be practical? In addition to reforming the employment-based system, what reforms are necessary in order to reach those families who have no coverage through the work place? Which approaches are both efficient and politically acceptable? Employment-based coverage of children will likely continue. The challenge for lawmakers is to find a way to cover more uninsured children without eroding employment-based coverage. Several current legislative proposals attempt to avoid this problem by excluding children who have access to employment-based coverage. Without such a requirement, the opportunity to purchase coverage at a discount would create incentives for some low-income employees to drop dependent/family coverage, which in turn could lead some employers to drop their health plans.     

THE AFFORDABLE CARE ACT AND COLLEGE ENROLLMENT DECISIONS

We investigate the effect of the expansion of the federal dependent coverage mandate for young adults under the Affordable Care Act (ACA) on college enrollment decisions of young Americans. The expansion removes the requirement that young individuals need to be enrolled as full‐time students in order to remain on their parents' health insurance past the age of 18 and expands the coverage mandate to age 26 irrespective of student status. This changes the incentives for the full‐time college enrollment decisions of young individuals. We use panel data from the Survey of Income and Program Participation (SIPP) for the years 2003–2013 and estimate that the dependent coverage expansion under the ACA decreases the probability to enroll as full‐time student by 3 percentage points using a difference‐in‐differences framework. Furthermore, we find that part‐time college enrollment is unaffected by the new policy. The results are robust to changes in the model specification and become stronger when we increase the sample overlap between treatment and control groups using trimming based on propensity scores. (JEL C35, I23, I10, I18)     

Questions and answers on health insurance benefit issues

This Issue Brief addresses eight topics in the areas of health insurance and health care costs. Using a question and answer format, the discussion draws largely on EBRI research and the EBRI Databook on Employee Benefits, third edition. In 1993, U.S. expenditures on health care were $884.2 billion, and they are projected to reach $2,173.7 billion by 2005, increasing at a projected average annual rate of 7.8 percent. Health care spending accounted for 13.9 percent of Gross Domestic Product (GDP) in 1993 and is projected to reach 17.9 percent of GDP by 2005. Among the factors contributing to the increase in health care costs are the growth in the number of individuals with traditional reimbursement health insurance coverage, the rapid expansion of technology and treatment options, and demographic factors such as the aging of the population. In 1993, employers, both public and private, spent $235.6 billion on group health insurance, accounting for 6.2 percent of total compensation. Group health insurance is the fastest growing component of total compensation, increasing at an average annual rate of 13.7 percent from 1960 to 1993. An increasing number of employees are required to make a cash contribution to their health insurance plan premium. In 1993, 61 percent of full-time employees in medium and large private establishments who participated in an employee only health insurance plan were required to make a contribution to the premium, up from 27 percent in 1979. In 1993, 185.3 million persons under age 65 had health insurance coverage, while 40.9 million people--or about 18.1 percent of the nonelderly population--received neither private health insurance nor publicly financed health coverage. Of those individuals who had health insurance coverage, 60.8 percent, or 137.4 million persons, received their health insurance through an employment-based plan. In 1993, 15.2 percent of the nonelderly population without health insurance coverage were noncitizens. In six states noncitizens represented a higher proportion of the total uninsured population than individuals in the nation as a whole. An increasing number of employers are self-funding their health insurance plans. In 1994, 74 percent of employers with 500 or more employees self-funded their health insurance plans, up from 63 percent in 1993. An estimated 22 million full-time employees in private industry and state and local governments participated in a self-funded employment-based health insurance plan.(ABSTRACT TRUNCATED AT 400 WORDS)     

Health Insurance and Risk of Divorce: Does Having Your Own Insurance Matter?

Most American adults under 65 obtain health insurance through their employers or their spouses' employers. The absence of a universal health care system in the United States puts Americans at considerable risk for losing their coverage when transitioning out of jobs or marriages. Scholars have found evidence of reduced job mobility among individuals who are dependent on their employers for health care coverage. In this study, the author found similar relationships between insurance and divorce. She applied the hazard model to married individuals in the longitudinal Survey of Income Program Participation (N = 17,388) and found lower divorce rates among people who were insured through their partners' plans without alternative sources of their own. Furthermore, she found gender differences in the relationship between health care coverage and divorce rates: Insurance‐dependent women had lower rates of divorce than men in similar situations. These findings draw attention to the importance of considering family processes when debating and evaluating health policies.     

Children Living With Uninsured Family Members: Differences by Family Structure

Despite increased access to insurance through the Patient Protection and Affordable Care Act of 2010, uninsurance rates are expected to remain relatively high. Having uninsured family members may expose children to financial hardships. Eligibility rules governing both private and public health insurance are based on outdated expectations about family structure. Using 2009–2011 data from the National Health Interview Survey (N = 65,038), the authors investigated family structure differences in family‐level insurance coverage of households with children. Children living with married biological parents were the least likely to have uninsured family members and most likely to have all family members covered by private insurance. Controlling for demographic characteristics and income, children in single‐mother families had the same risk of having an uninsured family member as children in married‐parent families. Children with cohabiting biological parents had higher rates of family uninsurance than children with married biological parents, even accounting for other characteristics.     

CAPS IN SEQUENTIAL CONTESTS

We study a sequential two‐stage all‐pay auction with two identical prizes. In each stage, the players compete for one prize and each player can win either one or two prizes. The designer may impose a cap on the players' bids in each of the stages. We analyze the equilibrium in this sequential all‐pay auction with bid caps and show that capping the players' bids is profitable for a designer who wishes to maximize the players' expected total bid. (JEL D44, D82, J31, J41)     

AFTER THE TOURNAMENT: OUTCOMES AND EFFORT PROVISION

Outcomes of workplace competitions may themselves influence subsequent behavior—particularly if employees feel wronged. In a laboratory experiment, we find that—consistent with inequity aversion—tournament losers supply less postcompetition effort than winners when doing so reduces their tournament opponent's earnings. Consistent with procedural fairness concerns, subjects who lose arbitrarily decided tournaments that disregard tournament effort choices supply even less post‐tournament effort than other losers. While losers' effort reductions consistent with inequity aversion persist, effort reductions following arbitrarily decided tournaments fade over time. Finally, we show that effort reductions related to inequity aversion could potentially be mitigated through workplace rotations. (JEL C90, J30, D03)     

THE EFFECT OF INSURANCE COVERAGE ON PREVENTIVE CARE

Despite the growth in health insurance products that differentially cover preventive care and nonpreventive care, little is known about how preventive care utilization responds to targeted changes in coverage. Using administrative data from a large company, this paper examines the implementation of an insurance benefit design which differentially increased the price of nonpreventive care while decreasing the price of prevention. Leveraging a difference‐in‐differences research strategy, we find that preventive care utilization did not increase and even declined due to the differential price change. This evidence indicates a meaningful negative cross‐price effect, suggesting that nonpreventive care and preventive care are complements. (JEL I13, I11)     

Work‐life policies and programs: Comparing the responsiveness of nonprofit and for‐profit organizations

Analysis of the data from the 1998 Business Work‐Life Study, one of the first comprehensive studies of how U.S. organizations are responding to the work‐life needs of the nation's changing workforce, indicates that nonprofits with one hundred or more employees are more likely than for‐profits to offer particular types of work‐life policies and programs (such as extended leaves following birth or adoption) and to pay for at least some of the costs of health insurance for part‐time employees. In contrast, nonprofits are less likely to offer other work‐life supports (such as paid maternity leave). Despite the resource constraints that can restrict the compensation and benefits packages offered by some nonprofits, the overall scope of the work‐life initiatives established by nonprofits is similar to those initiatives at for‐profit organizations. Regression analyses find that although organizations' profit status does not explain variance in the scope of their work‐life initiatives, three of the variables measured by this study (indicators of workplace commitment to diversity and work‐life issues, percentage of women in executive positions, and the size of the workforce) do.     

THE LOCAL ECONOMIC IMPACT OF A LARGE RESEARCH UNIVERSITY: EVIDENCE FROM UC MERCED

In this paper, I estimate the short‐run economic effects of the opening of The University of California, Merced in 2005 by comparing Merced with a counterfactual constructed by the synthetic control method. During the period 2005–2014, the opening of the campus has increased local employment by 13%, mainly in nontraded industries, such as the service sector. These findings suggest that a large research university could bring immediate benefits to the local economy because of its large demand from students and employees. (JEL J24, O18, R11)     

Group Long-Term Care Insurance: Decision-Making Factors and Implications for Financing Long-Term Care

This study proposes and tests a systemic family decisionmaking framework to understand group long-term care insurance (LTCI) enrollment decisions. A random sample of public employees who were offered group LTCI as a workplace benefit were examined. Findings reveal very good predictive efficacy for the overall conceptual framework with a pseudo R² value of .687, and reinforced the contributions of factors within the family system. Enrollees were more likely to have discussed the decision with others, used information sources, and had prior experience when compared to non-enrollees. Perceived health status, financial knowledge, attitudes regarding the role of private insurance, risk taking, and coverage features were additional factors related to enrollment decisions. The findings help to inform policymakers about the potential of LTCI as one strategy for financing long-term care.     

Small employers and health benefits: findings from the 2000 Small Employer Health Benefits Survey

Many small employers (between two and 50 workers) are making decisions about whether to offer health benefits to their workers without being fully aware of the tax advantages that can make this benefit more affordable. Fifty-seven percent of small employers did not know that they can deduct 100 percent of their health insurance premiums. Nearly one-half of small employers are not aware that workers who purchase health insurance on their own generally cannot deduct 100 percent of their health insurance premiums. Small employers are largely unaware of the laws that have been enacted by nearly all states and the federal government with the intent of making health insurance more accessible and more affordable for many small employers. More than 60 percent did not know that insurers may not deny health insurance coverage to small employers even when the health status of their workers is poor. Most employers offer sound business reasons for offering health benefits to workers. Many have found that it helps with employee recruitment and retention, increases productivity, and reduces absenteeism. Nearly 50 percent of the employers offering dependent (family) coverage report that the workers do not take coverage for their dependents because the dependents have coverage from somewhere else. Twenty-seven percent report their employees decline dependent coverage because they cannot afford the premiums. Many small employers that do not offer health benefits are potential purchasers. Twelve percent are either extremely or very likely to start offering health benefits in the next two years, and 17 percent are somewhat likely to start offering health benefits. A number of factors would increase the likelihood that a small business would seriously consider offering a health benefits plan. Two-thirds of small-business owners said they would seriously consider offering health benefits if the government provided assistance with premiums. Almost one-half would consider doing so if insurance costs fell 10 percent. In addition, one-half would be more likely to seriously consider offering a health benefits plan if employees demand it. Many small employers with health benefits have recently switched health plans, and 34 percent report that they did so within the past year. Affordability for the employer and the worker is clearly a critical factor affecting the likelihood of switching health plans. Nearly all employers who have switched health plans within the past five years cite cost as the main reason. One-third of companies offering health benefits think they will change coverage, and 5 percent think they would drop coverage if the cost of health insurance were to increase by 5 percent.     

University efforts to address confidentiality issues for STI services

Abstract

Objective: This study assessed university policies for addressing confidentiality issues for students seeking STI services. Participants: Universities with sponsored health insurance plans (SHIP) and/or wellness centers were selected from a university health services survey in 2017. Methods: STI service coverage and polices for addressing confidentiality issues related to explanation of benefit (EOB) forms were stratified by institution type (4-year versus 2-year) and minority serving institution (MSI) status. Rao-Scott chi-square tests were used to assess for differences in STI service coverage and polices. Results: More non-MSIs (61.6%) had SHIPs compared to MSIs (40.0%, p?<?.001). Only 40.8% of health centers had a policy for addressing EOB-related confidently issues. Of those, the most reported policy was that students could pay out-of-pocket to avoid generating an EOB (36.2%). Conclusions: Reducing confidentiality barriers are important for STI prevention in students. Universities may consider establishing policies for addressing EOB-related confidentiality concerns.