Efecto del deslizamiento y diámetro del dado en las curvas de flujo

II. ESSENTIALS OF REGULATING THE HEALTH INSURANCE MARKET

Approximately 61 percent of the non-elderly population (totaling 260 million people) receives health coverage through an employer.⁵ 5 percent purchase individual coverage.⁶ 16 percent receives government-sponsored coverage, and 18 percent are uninsured.⁷

Why do so many Americans obtain health insurance through their employer – particularly when only 2% of the population had employment-based coverage in 1930?⁸ In an earlier article, I explained that this outcome was a historical accident, fueled by federal labor and tax policy:

The first dramatic increase in employment-based coverage came during World War II. Wage and price controls were instituted by the Office of Price Administration in an attempt to deal with inflation.

Employer contributions to insurance and pension funds were not counted as wages, and were accordingly excluded from the wage controls. The freezing of cash wages forced employers to compete for scarce labor by enhancing their fringe benefit packages. Health insurance offered a straightforward way for employers to sweeten their compensation package in a manner that would be quite appealing to potential employees.

5. KAISER FAMILY FOUND,The Uninsured: A Primer, Key Facts about Americans without Health Insurance, KAISER FAMILY FOUND. 1 (Oct. 2007), available at http://kff.org/uninsured/upload/7451-03.pdf

6. Id.

7. Id. To be sure, how many uninsured there are depends greatly on how long one must be without insurance to qualify. If one focuses on the hard-core uninsured (those without coverage for a two year period), the number of uninsured is far smaller.

8. Robert B. Helms, The Tax Treatment of Health Insurance: Early History and Evidence, 1940-1970, in EMPOWERING HEALTH CARE CONSUMERS THROUGH TAX REFORM 1, 8 (Grace-Marie Arnett ed., 1999).

The second impetus for employment-based coverage was the federal tax code. In 1943, the Internal Revenue Service issued a ruling indicating that the amounts paid by employers for insurance for employees did not constitute income to employees, even though employers could deduct these amounts as ordinary and necessary business expenses. Ten years later, the IRS withdrew this ruling, but Congress amended the Internal Revenue Code in 1954 to expressly exclude employment-based coverage from taxable income. In effect, this asymmetric tax treatment allows employers to purchase health insurance for their employees using employees’ before-tax income, rather than forcing employees to purchase it themselves with after-tax income. The amount of the subsidy is a function of the marginal tax rate for any given taxpayer, but its size is larger for higher-income taxpayers because of the progressivity of federal taxation. In the aggregate, this subsidy is worth more than $100 billion in foregone tax revenue per year, and is the second largest tax expenditure, after home mortgage interest. The result is a substantial financial incentive for employees to obtain coverage through their employer if at all possible.

Labor unions were another factor in the rise of employment-based coverage. During the late 1940s and 1950s, unions aggressively bargained for richer benefit packages, with health insurance at the top of their list. In industries in which unions were strong (e.g., manufacturing and public-sector employment), the result was that many subscribers obtained first-dollar insurance coverage and medical care at no out-of-pocket cost to themselves whatsoever. Employers with non-unionized workforces also offered rich benefits to discourage their employees from unionizing.⁹

9. David A. Hyman & Mark Hall, Two Cheers For Employment-Based Health Insurance, 2 YALE J.HEALTH POL’Y, L. & ETHICS 23, 25-26 (2001-2002) (footnotes omitted).

The linkage between employment and health insurance has significant distributional consequences. Large and mid-size employers are more likely to offer coverage, and more likely to offer a choice of coverage than small employers.¹⁰ Employment-based coverage is much less likely to be offered to those who work in certain industries (e.g., agriculture, retail, and food service), and those working less than full-time.¹¹

The link between employment and health insurance also has substantial regulatory consequences. Pursuant to the McCarran-Ferguson Act, states have primary regulatory authority over insurance sold to state residents.¹² However, federal preemption of state regulation (with or without direct federal regulation) is always possible, as long as Congress expressly indicates its intention to affect the “business of insurance.”¹³ Thus, the Employee Retirement Income Security Act broadly preempts state regulation of employment based health insurance -- except to the extent the employer provides coverage by purchasing a state-regulated health insurance contract.¹⁴ Conversely, employment-based health insurance is not subject to state regulation if the employer self-funds the coverage it provides to its employees.¹⁵ Of those who obtain health insurance through their employer, 45 percent are funded by the employer purchasing a health insurance contract, and 55 percent are self-insured by the employer.¹⁶

In practical terms, this framework means that the 71 million Americans who obtain coverage individually or through an employer’s insured plan are subject to both state and federal regulation, while the 87 million Americans who obtain coverage through an employer’s self-funded plan are subject only to federal regulation.¹⁷

How have the federal and state governments exercised this regulatory authority? At the federal level, there has been relatively limited direct regulation of health insurance. When ERISA was enacted in 1974, it focused on pension plans, and imposed no substantive regulations on

10. Employer Health Benefits: 2007 Annual Survey, KAISER FAMILY FOUND. &

HEALTH RES. &EDUC. TR. 4-5, 58 (2007) [hereinafter 2007 Annual Benefits Survey], available at http://kff.org/insurance/7672/upload/76723.pdf.

11. Id. at 34.

12. 15 U.S.C. § 1012(a) (2000).

13. 15 U.S.C. § 1012(b) (2000).

14. Such coverage is called an “a “fully insured plan.” See 2007 Annual Benefits Survey, supra note 10, at 146.

15. Such coverage is called a self-funded plan. Id.

16. Id. at 147.

17. See id. at 1. See supra note 16 and accompanying text.

employment-based health insurance.¹⁸ Over the intervening 34 years, there have been a few new substantive regulations, including requirements prohibiting “drive-through deliveries,”¹⁹ requiring parity in coverage of mental health treatment,²⁰ and imposing limits on the use of preexisting condition exclusions.²¹ Because ERISA preempts state law, but does not impose much in the way of substantive regulation, this framework means that self-funded employers have operated in a virtual regulatory vacuum.

Self-funded employers are more likely to operate in multiple states, so this regulatory vacuum has meant such employers can implement uniform coverage arrangements without worrying about state-by-state regulatory variation. Stated differently, the current framework provides self-funded employers with virtually complete freedom to design and implement whatever health care coverage they desire – including spending as little or as much as they want.²²

At the state level, there has been a massive amount of regulation affecting every aspect of the relationship between insurers, providers, and patients. As Figure 1 demonstrates, there are three distinct relationships that can be regulated: the relationship between the insurer and the physician/provider (Type I regulation); the relationship between the physician/provider and the patient (Type II regulation), and the relationship between the patient and the insurer (Type III regulation).²³

18. See Hyman & Hall, supra note 9, at 29.

19. Newborns’ and Mothers’ Health Protection Act of 1996, 42 U.S.C. §300gg-4 (2000).

20. Mental Health Parity Act of 1996, 29 U.S.C. §1185a (2000 and Supp. 111 2004) and 42 U.S.C. §300gg-5 (2000 and Supp. 111 2004).

21. See 26 U.S.C. §9801 (2000 and Supp. 111 2004); 29 U.S.C. §1181 (2000 and Supp. 111 2004); 42 U.S.C. §300gg (2000).

22. See Amy B. Monahan, Pay or Play Laws, ERISA Preemption, and Potential Lessons from Massachusetts, 55 U. KAN. L. REV. 1203 (2007); Retail Industry Leaders Assn. v. Fiedler, 475 F.3d 180 (4th Cir. 2007).

23. There are also regulatory strategies that do not fit neatly into this model, such as solvency regulation and premium taxes. All states employ such strategies, and impose premium taxes as high as 3%. JEFF LEMIEUX,AHIPCTR FOR POLICY &RES.,PERSPECTIVE: ADMINISTRATIVE COSTS OF PRIVATE HEALTH INSURANCE PLANS 1 (2005), available at http://www.ahipresearch.org/pdfs/Administrative_Costs_030705.pdf. Because of ERISA preemption, self-funded employers are not subject to such taxes.

Examples of Type I regulation include “any willing provider”

legislation, restrictions on compensation mechanisms, and prohibitions on

“gag clauses.” Type II regulation includes mandated disclosure of qualifications, results, and incentives to limit care. Type III regulation includes mandated coverage of certain benefits, such as alcohol treatment, and post-partum stays, and provisions affecting the circumstances and price at which insurance may be offered (including guaranteed issue and community rating).

States have adopted numerous Type I and Type III regulations, but relatively few Type II regulations.²⁴ The number of Type I and Type III regulations also appears to have grown dramatically over time.²⁵ The most common Type I regulations are any willing provider/freedom of choice legislation covering chiropractors (46 states), psychologists (44 states) and optometrists (43 states).²⁶ The most common Type III regulations are mandated coverage of newborns (50 states), alcoholism treatment (45 states) diabetic supplies (47 states), breast reconstruction after mastectomy (48 states), and mammograms (50 states).²⁷

Proponents of mandates sometimes suggest that they decrease costs.

By and large, this argument is pure sophistry. Proponents are focusing on the fact that those receiving the mandated services suddenly face lower out-of-pocket costs, but this result is a mathematical consequence of spreading

24. See Victoria Craig Bunce et al., Health Insurance Mandates in the States 2006, COUNCIL FOR AFFORDABLE HEALTH INSURANCE (2006) [hereinafter CAHI], available at http://www.cahi.org/cahi_contents/resources/pdf/MandatePub2006.pdf.

25. Compare U.S. GEN. ACCOUNTING OFFICE, GAO/HEHS-96-161, HEALTH

INSURANCE REGULATION VARYING STATE REQUIREMENTS AFFECT COST OF INSURANCE 9 (1996) (“On average, states have enacted laws mandating about 18 specific benefits), and CAHI, supra note 24, (identifying more than 1800 mandates, or 36 per state).

26. CAHI, supra note 24.

27. Id.

the costs for those receiving the mandated treatment across a larger population. This result is obviously not the same thing as lower costs overall.

To the extent private insurance is not already providing the mandated coverage, the mandate will increase costs – with the magnitude of the increase affected by a number of factors, including the elasticity of demand for the mandated services.²⁸ Estimates of these costs vary widely.²⁹