are clustered in individual families. Sometimes one does see the correlation, but the family spending is driven by people with chronic conditions. The idea of affordability is also part of the question—whether it should be done at the family level, meaning that even people without health problems are carrying the burden. Even the healthy people in families with others who spend a lot on health care are going to be affected by that spending to the extent that it affects decisions regarding other spending that goes on in the household.

Claxton added that, even forgetting about chronic conditions, if one looks at families, the person with the highest spending on average contributes 70 percent of the family’s spending generally. It is not just families with chronic conditions; it is generally true that the person who spends the most really drives the family spending.

Emmett Keeler (RAND) stated that, as a general point, the generosity of insurance is a way of transforming medical expenses into premiums. With generous insurance, one pays a high premium and has low out-of-pocket expenses. Because it is a transfer, one would always want to include the premiums as part of the research on burden and affordability. He also asked why, in Claxton’s presentation, small firms would give up the tax benefits of providing all the premium. He said it must relate to certain market factors that he does not understand.

Claxton responded that focus groups he has conducted with small firms indicate that the average wage in small firms is much lower than the average wage in larger firms. So there is probably less tax benefit there. And given the number of two-worker families now, small firms like it when the family members work at large firms. They feel they need to contribute for their own workers, but small firms are much less likely to do so for the family members. Keeler agreed, pointing out that the same situation occurs in the military health care system.

Claxton added that, based on some focus groups and some additional research done last year, they found that with very small firms, those differences are even more pronounced. Many times the owners of very small firms—with fewer than 20 workers, and in some cases fewer than 10—said that they contributed a certain percentage toward single coverage, which could be 50 or 100 percent, but they contributed nothing in addition for family coverage.

Thesia Garner expressed concern about different references to measures. The first session was primarily focused on the medical care risk index. And this session was identified as focusing on thresholds. Ziliak talked about adjusting thresholds, and Cunningham spoke about an affordability threshold or index. She said that they were talking about different things: one is more of an ex ante and the other is more of an ex post measure. She said she was not sure what this affordability measure is because it is not



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