America's Children Health Insurance and Access to Care (1998) / Chapter Skim
Currently Skimming:
Appendix A Market-Based Approaches to Insurance Reform
Appendix A Market-Based Approaches to Insurance Reform
Pages 141-154
The Chapter Skim interface presents what we've algorithmically identified as the most significant single chunk of text within every page in the chapter.
Select key terms on the right to highlight them within pages of the chapter.
From page 141... ...
Appendixes
|
From page 143... ...
There was little reason to buy health insurance until medicine created the ability to affect medical outcomes. The cost of these new forms of medical care created a desire to spread the risk of a relatively large medical expenditure among a large number of inclivicluals, any one of whom would face a low probability of an expensive medical conclition.4 Although the development of modern scientific medicine can be traced to the 19th century, several developments cluring and after World War IT were most important in shaping the unique form of health insurance in the United States.5 iThis appendix was prepared at the request of the Committee on Children, Health Insurance, and Access to Care as background material about private sector health insurance coverage of children.
|
From page 144... ...
In abolition, tax policy may also be partially responsible for extending coverage to clepenclents, because providing coverage for an employee's family was an aciclitional way to purchase insurance with tax-free clollars. THE EFFECTS OF HEALTH INSURANCE The private sector health insurance industry has grown to become a major sector of our economy.
|
From page 145... ...
.12 · Because inclivicluals with health insurance use more health care services than uninsured inclivic3uals, the special tax subsidies for employer- based health insurance have increased the ciemanc3 for health care above the amount that would have existed without the subsidy. As research by Martin Felcistein anc3 others has shown, this increase in the clemanc3 for health care resulted in higher health care prices anc3 higher rates of growth in health care expenditures than would have existed without the subsiclies.l3 · Tax policy has also contributed to the health cost problem by reducing the extent of consumer cost sharing in health insurance plans.
|
From page 146... ...
· The tax treatment of health insurance has also contributed to a very regressive distribution of tax subsidies. Because the value of a benefit that is excluded from taxable income increases with one's marginal tax rate, the result of the present tax policy is to distribute the value of the tax subsidies more to higher income individuals who work for employers offering health insurance than to lower income workers.
|
From page 147... ...
Gail Jensen presents data showing that state mandates increased from 37 in 1970 to 854 in 1990.~7 She also reports on studies showing that these mandates significantly raise the cost of health insurance, which has especially strong effects on the ability of small firms to offer health insurance to their employees. More recent studies indicate that the nature of state legislative action is changing, with more laws now being passed to regulate the activities anc3 coverage of managed care plans.~9 Anc3, as shown by recent activity by Congress to mandate mental health parity anc3 regulate maternity coverage, the legislative urge to mandate benefits anc3 regulate health insurance is not limited to state legislatures.
|
From page 148... ...
Variations of federal mandates have been proposed in past years, the most recent in the Clinton Aclministration's Health Security Act. Although several states have proviciec3 state insurance plans for children or subsidies for private coverage, Hawaii is the only state so far to use a manciatec3 benefits approach.2i Most of the actual proposals have incluciec3 exemptions for small employers as a way to reduce the economic effects of mandates or to phase in the new coverage.
|
From page 149... ...
This creates an especially difficult dilemma for attempts to increase insurance coverage for children through federal mandates. Because a large proportion of uninsured children are ciepencients of adults that work for small firms,23 any exemption of small firms reduces the ability of a manciatec3 benefit law to increase insurance coverage for children.
|
From page 150... ...
Tax policy proposals to reform health care markets are supported by a number of economists anc3 health policy experts, but are probably the least unclerstooc3 by politicians anc3 the public.27 In abolition to being misunclerstooc3, any change in tax policy creates winners anc3 losers, so the losers can be expected to strongly oppose the change. Scholars of tax policy have also criticized any use of the tax system to achieve any social objective because such proposals complicate the tax system, create distorting incentives, anc3 interfere with the objective to create an efficient anc3 fair system of raising revenue.28 Any attempt to use tax policy to encourage more coverage of children will not be immune to that criticism.
|
From page 151... ...
For simplicity, the following section considers two methods of providing tax subsidies tax credits and tax deductions and two targets for these subsidies employers and taxpayers.
|
From page 152... ...
In aclclition, by making tax credits refunclable, it is possible to use the tax system to subsidize those people who JO not currently pay income taxes. A tax crecl it is a cl irect reduction of taxes owed and floes not require a taxpayer to itemize ciecluctions in order to qualify for the credit.
|
From page 153... ...
357-368. 32Using the arguments that the present exclusion of employer-based health insurance is a major cause of distorted incentives in health care markets and is a regressive public subsidy, two major plans for refundable tax credits propose to include the value of employer-based health insurance in taxable income as the major source of funding.
|
From page 154... ...
By driving choice and efficiency in the health care marketplace, consumers will begin to reverse the cycle of high costs that has been forcing people without job~basec3 insurance out of the health care marketplace. This type of health care market has advantages for all consumers, not just the children who receive the tax credits.
|
Key Terms
This material may be derived from roughly machine-read images, and so is provided only to facilitate research.
More
information on Chapter Skim is available.