Reinsuring Health

Why More Middle-Class People Are Uninsured and What Government Can Do

Publication Year: 2007

America's current system of health insurance, which relies almost exclusively on employer-sponsored coverage, is in danger of collapse, and this problem is not limited to the poor and working class. An increasing number of middle class Americans do not have employer-provided insurance and—due to skyrocketing premiums—cannot afford to purchase coverage for themselves. Reinsuring Health, by economist Katherine Swartz, examines this growing national crisis and outlines a concrete plan to make health insurance accessible and affordable for all Americans. Reinsuring Health documents why the number of uninsured Americans—now 45.5 million people—has grown in the last twenty-five years. Swartz focuses on how labor market changes—such as the decline of domestic manufacturing, decreased unionization, and the growth of non-standard work arrangements—have led U.S. employers to retreat from providing health insurance for their workers. These trends, combined with the increasing costs of medical care, have led to an explosion in health insurance premiums and a decline in coverage, particularly among the middle-class. Since those who seek insurance as individuals are generally most likely to need health care, private insurers charge higher premiums in the individual (non-group) markets than to people who obtain group insurance. This makes individual health insurance less attractive to the young and increasingly unaffordable for middle-class Americans. Similarly, insurers charge higher per person (or per family) premiums to small firms than to large companies, so many small firms do not sponsor coverage for their employees. Reinsuring Health shows how these problems can be overcome if the federal government provides a new reinsurance program which would protect insurance companies that provide small group and individual health insurance against the possibility that their policy-holders will incur very high medical expenses. By assuming some of the risk that people will face extremely costly medical bills, the government will make insurers less hesitant to offer coverage to high-risk individuals, and will help drive down premiums for others. Reinsuring Health demonstrates that this form of government reinsurance has worked in the past, helping to establish smooth running private markets for catastrophe insurance and secondary mortgages. Today, growing numbers of middle class Americans lack health insurance. Protection against the possibility of falling ill or getting hurt and having to pay extraordinary health care bills should not be a luxury available only to the very rich and the very poor. Reinsuring Health proposes a straightforward solution that would bring health insurance back within the reach of the increasing ranks of the uninsured, particularly those who are in the middle class.

Published by: Russell Sage Foundation

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Since the mid-1970s, the federal government has conducted nationally representative surveys of the U.S. population to learn more about those who do not have health insurance. Twenty-five years ago two-thirds of the uninsured lived in poverty or had incomes just above the poverty level, and two-fifths were children. For policymakers determined to reduce ...

Acknowledgments

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pp. xiii-xvi

As my family and friends know all too well, Reinsuring Health has been a long time coming. I wrote this book with the hope that it would contribute to the public's understanding of why so many Americans are uninsured and what might be done to remedy the situation. I would dearly like to see this great country develop a policy that would guarantee ...

Chapter 1. A Health Insurance System in Crisis?

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pp. 1-12

Susan Mitchell* does not have health insurance. She is a freelance editor and writer who until three years ago was an employee of a medium-sized company in Washington, D.C. Health insurance had been part of her compensation. Susan writes public relations announcements and edits documents that are sent to the firm's clients. When the ...

PART I. Why People Lack Health Insurance

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pp. 13-14

Chapter 2. The Growing Ranks of the Insured: Who Lacks Health Insurance?

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pp. 15-43

If you want to have a career in broadcasting, journalism, advertising, graphic design, filmmaking, or interior design, prepare to live without health insurance. Even many high-tech computer-related occupations, such as software programming, hold out the same prospect. None of this was true twenty-five years ago—but when it comes to health ...

Chapter 3. Why Employer-Group Health Insurance Is Cheaper—and Why Those Who Have It Are Lucky

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pp. 44-59

What is it about employer groups that insurance companies find attractive? How did it come to pass that the United States has an employer-based health insurance system? In 2004, 63 percent of Americans under age sixty-five obtained health insurance through their own or a family member's employer, down from 67 percent in ...

Chapter 4. How Health Insurance Markets Work

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pp. 60-82

Health insurance is different from most of the goods and services we buy each week. The price of a half-gallon of milk or a sweater does not depend on who buys it. But the costs of producing and purchasing health insurance depend in large part on who buys it and who belongs to a group that buys it. ...

PART II. Public Policies to Make Private Insurance More Available

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pp. 83-84

The need for government policies to help small firms and individuals obtain health insurance is urgent. But policies focused only on providing subsidies to help people purchase private insurance are inadequate because the fail to address the way insurers respond to adverse selection in the individual and small-groups markets. In this part ...

Chapter 5. Two Approaches: High-Risk Pools and Assessments to Cover High-Risk People

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pp. 85-100

We need to devise a policy approach that substantially reduces insurers' risk of extremely high expenditures. The cost of using selection mechanisms will then exceed their advantages for insurers. Moreover, if the expenses of very high-cost people are spread among the total population, low-risk people will not face significantly ...

Chapter 6. A Third Approach: The Government as Reinsure rfor Small-Group and Individual Markets

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pp. 101-122

Almost all insurers purchase reinsurance to protect themselves from low-probability but very costly events that could force them into bankruptcy. The hurricane seasons of 2004 and 2005 provide good examples of financial disasters that occasionally befall property and casualty insurers with a large proportion of their business in Florida ...

PART III. Getting from Here to There

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pp. 123-124

Chapter 7. The Need for a New Health Insurance Structure

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pp. 125-136

The American system of health insurance is in trouble. Since at least the 1950s, the country has had a health insurance structure that relies on the vast majority of people having insurance as part of employment compensation. The expectation has been that as the economy grew and the country prospered, more and more workers and their ...

Appendix. Precedents for Government Assuming Responsibility for the Worst Risks

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pp. 137-148

Notes

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pp. 149-180

References

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pp. 181-192

Index

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pp. 193-203

E-ISBN-13: 9781610445214
Print-ISBN-13: 9780871547880
Print-ISBN-10: 0871547880

Page Count: 224
Publication Year: 2007