1. The Access Crisis: Are Employer Mandates Part of the Solution?
Daniel Lasser, MD, MPH
April 25, 2007

2. Outline Employment-based health insurance -- a brief status report
Employer mandates -- a possible solution to the health insurance crisis?
A brief look at the role of employer mandates in the Massachusetts plan
Challenges

3. Employment-Based Health Insurance
Unlike most other industrialized nations, US policy has encouraged and subsidized the workplace as a primary means for managing access to health insurance
Rapid growth after World War II
Fueled by favorable tax policy
Began as social insurance, with community rating
Coverage has peaked
As a %: : 66.8% 2004: %
Absolute #s: 2000: M 2004: 159.5M

4. Health Insurance Coverage of the U.S. Population, 2005
Employer-based
Direct Purchase
Medicare
Medicaid
Military/Other
Not Covered
Total = 294 million
Source: U.S. Census Bureau, Current Population Survey, 2005 Annual Social and Economic Supplement
Note: Estimates by type of coverage are not mutually exclusive; people can be covered by more than one type of insurance during the year.

5. Which one of the following is correct regarding medical insurance coverage in the U.S.?*
The majority of persons 18 years of age or under are uninsured
The majority of uninsured persons come from working families
Medicaid coverage is available for all families with annual incomes below the poverty level
Health care workers are more likely than workers in other industries to have coverage
Hispanic families are more likely than African-American families to have coverage
*2006 ABFM In-Training Exam

6. Who is insured? Individuals <18: 88% are insured
Individuals 65 or older: 99% are insured
Young adults 18-20: 70% are insured
In 2002, 10.5 million people below the federal poverty level were not insured by Medicaid

7. Who is uninsured? Considering ethnicity:
1/3 of Hispanic families are without coverage
20% of African-American families are without coverage
19% of Asian families are without coverage
11% of white families are without coverage
Health care workers and their families are more likely to be uninsured than workers in other industries
~80% of uninsured families have at least one working family member

8. Current Problems with Employment-Based Health Insurance
Fewer employees take coverage when it is offered
Some may even be eligible for Medicaid
Coverage has largely shifted from community rating to experience rating
With increased costs, more employers are dropping coverage
Smaller employers and those with predominantly low wage workers are unlikely to offer health insurance
There are problems with portability and provider continuity

9. Current Problems with Employment-Based Health Insurance

10. Employer Mandate Models
Require all firms to offer health insurance (All? Above a certain size?)
Play or play : Require firms that don’t provide health insurance to an employee to pay into a pool to support coverage from another source
Per employee
Based on a percentage of payroll costs
Require a penalty to be assessed to firms that do not pay or play
Hawaii requires nearly all employers to provide health insurance
Uninsured rate fell to 5% shortly after implementation; now ~10%
As of mid-2006, 28 states were considering pay or play legislation
24 target employers with >1,000 employees

11. The Massachusetts Experience
1988: Universal Health Care Law
$1680 Pay or Play Employer Mandate
Delayed 3 times, repealed in 1996
Led to expansion of Medicaid, Student Insurance Mandate
1996: Medicaid Waiver
Led to enrollee growth, coverage of all children, senior pharmacy program

12. The Massachusetts Experience
2006: Chapter 58
Individual mandate: by 7/1/07, all 18+ must obtain health insurance
Penalties assessed if “affordable” coverage is declined
Expansion of Medicaid
Market reforms, “Connector”
Employer mandate
Non-offering employers (>10) pay 295/worker
Must offer section 125 “cafeteria plans”
Free rider surcharge
Employers with uninsured employees who are frequent users may be charged up to 100% of costs >$50K
No charge if offering 125 plan

13. Employer Mandate: Challenges
Economic concerns
Local: Economic disadvantage for employers in states who adopt mandates
Global: Economic disadvantage in competing with firms in countries without employer-based health coverage
Note: If combined with an individual mandate -- employer premium costs may rise as non-participating employees opt in
Political lobby
Legal – ERISA pre-emption

14. Conclusions
Employment-based health insurance is the predominant source of coverage in the US
In the current political environment, employer mandates may play an important role in expanding access to insurance
There will be a greater likelihood for success if combined with other approaches as well