Patients' Rights & Tax Bills Pending: How Tax Changes Might Affect Health Coverage Assessed in New Book by EBRI
WASHINGTON, Aug. 12 /PRNewswire/ -- With Congress likely to take up patients' rights and tax bills this fall, a new book by the nonpartisan Employee Benefit Research Institute (EBRI) lays out how the nation's employment-based health insurance system may be affected by tax code changes. The book also contains results from a new survey that indicates strong public support for the existing employment-based health insurance system.

The book, Severing the Link Between Health Insurance and Employment, is available free to reporters by contacting Danny Devine at 202-775-6308 or devine@ebri.org. It is based on proceedings of the Spring 1999 EBRI policy forum, underwritten by a grant from the Princeton, NJ-based Robert Wood Johnson Foundation, which brought together more than a hundred experts from all perspectives to discuss how tax changes might affect the American system of health insurance.

Tax-cut legislation just passed by Congress -- which President Clinton has said he will veto -- contains various provisions that would expand the options for individuals to obtain health insurance individually, outside employment-based health coverage. Even if the recent tax bill is vetoed, Congress is expected to pass a smaller version later this year, along with patients' rights legislation. Both measures have potentially sweeping implications for the voluntary employment-based health insurance system in the United States.

Currently, the vast majority of Americans with health insurance get their coverage through an employer: Two-thirds of all those under age 65, amounting to 151.7 million Americans, depend on employment-based health insurance. Authors in the EBRI book explore in detail the link between the health insurance and employment, how various federal policies might put that link at risk, and what the implications of those policies might be for workers, employers, and the government. Contributors included leaders of the health care and insurance industries, the benefits sector, unions, employers, and legislators.

Among the key findings in the EBRI book:

  • Proposals in Congress to create new tax credits for buying health insurance might enhance the existing employment-based health insurance system that covers the vast majority of Americans -- or could put that system at risk. The EBRI book discusses implications of recent proposals to change the tax treatment of employment-based health benefits. For instance, some experts say that tax credits targeted to low-income families would help expand coverage without eroding the employment-based system, while proposals to completely or largely end existing tax preferences may force employers to drop coverage and drive up the number of uninsured. Others argue that more tax preferences for individual-based insurance would be the most effective way of helping expand health coverage.
  • Support by workers for the existing employment-based health insurance system may depend to a large degree on the preferential tax treatment they receive. Employment-based health premiums are excluded, without limit, from workers' taxable income, and in 1998 this tax exclusion for workers amounted to an estimated $111 billion.
  • The most visible drawback to the voluntary system of health insurance, however designed, is the 43 million Americans who have health insurance. About 18 percent of the U.S. population is uninsured.
  • Some argue that changing the tax code to enhance individual-based insurance would reduce the number of uninsured and promote tax fairness for those who cannot obtain health coverage through work. Others warn that removing the existing tax subsidy for the employment-based health insurance system would result in adverse selection -- a situation where healthy, low-risk participants drop coverage and only the high-risk, unhealthy participants remain, thereby forcing premiums to go up and ultimately making the health plan unsustainable. The book presents findings from a special survey done for the forum that provides insights on how workers might respond to change.
  • According to the survey done for the forum, 68 percent of Americans with employment-based health insurance were satisfied with the current mix of benefits and wages. About 20 percent reported they would prefer higher health benefits and lower wages, while 8 percent reported the opposite preference -- for lower health benefits and higher wages.

Severing the Link Between Health Insurance and Employment (ISBN 0-86643-093-8) is published the Employee Benefit Research Institute Education and Research Fund (EBRI-ERF). Copies are $29.95, although reporters may obtain a complimentary copy by contacting Danny Devine at 202-775-6308, devine@ebri.org.

EBRI is a private, nonprofit, nonpartisan public policy research organization based in Washington, DC. Founded in 1978, its mission is to contribute to, to encourage, and to enhance the development of sound employee benefit programs and sound public policy through objective research and education. EBRI does not lobby and does not take positions on legislative proposals.

SOURCE: Employee Benefit Research Institute

WEB SITE: http://www.ebri.org/

CO: Employee Benefit Research Institute; Robert Wood Foundation

ST: District of Columbia, New Jersey

Redistribution, retransmission, republication, or commercial exploitation of this press release are expressly prohibited without the written consent of PR Newswire.
Posted August 12, 1999.

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