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date: 07 August 2020

Access to Health Insurance and Health Benefits

Abstract and Keywords

This article examines the five forms of payment for healthcare that are common in the United States: out-of-pocket, charity, direct public provision, public health insurance, and private health insurance (including employer-sponsored insurance). After discussing the history of each of the five approaches, the article considers their advantages and disadvantages as well as their current status. It examines next the 2010 Affordable Care Act. Although the Affordable Care Act focuses primarily on expanding public health insurance and public financing for private health insurance, it incorporates all five approaches to financing care. Finally this chapter considers why the United States retains this patchwork of different forms of coverage rather than adopting a single coherent system of health care finance and discusses the likely future of the American approach.

Keywords: healthcare, government-sponsored healthcare, United States, out-of-pocket payment, charity, direct public provision, public health insurance, private health insurance, employer-sponsored insurance, Affordable Care Act

Healthcare products and services are very valuable.1 Most obviously, they extend the duration of human life by eliminating or curing diseases and permitting recovery from injuries. Healthcare relieves pain and suffering and contributes to human productivity and well-being. Finally, healthcare meliorates the limiting effects of disabilities, even when it cannot cure them, making it possible for individuals with physical and mental limitations (including limitations due to advanced age) to lead more “normal” lives.

The value of healthcare is attested to by the amounts Americans are willing to spend on it. In 2012, the most recent year for which we have more or less complete data, Americans spent $2.8 billion on healthcare; $8,915 per person and 17.2% of our gross domestic product.2 We spend more on healthcare than we do on food, housing, or transportation—more than we do on anything else.

Assuming, however, that we place a high value on healthcare, we must find a way to pay for it. Individuals pay for most goods and services in our society out of pocket, or, in the case of large-ticket items, by borrowing to pay for them. Until the second half of the twentieth century, Americans paid for most healthcare items and services out of pocket as well. Out-of-pocket expenditures still make up a substantial share of healthcare expenditures. Healthcare services are also often purchased on credit, either extended by providers of services or through commercial credit cards.

But there are serious limitations to the possibilities of paying for healthcare out of pocket. The distribution of healthcare costs is dramatically skewed. In 2010, 1% of healthcare consumers were responsible for 21.4% of healthcare costs, 5% for 49.9% of costs, and 10% for 65.6% of costs.3 Healthcare can also be very costly, particularly hospital and nursing-home (p. 148) care and pharmaceuticals. The costs of treatment for major diseases or traumatic injuries can easily run into six, even seven, figures. Few people can afford these costs out of pocket, and although some individuals may be able to purchase services on credit, individuals with serious health problems are poor credit risks.

Moreover, income distribution in the United States is also dramatically skewed. Americans in the bottom quintile of the American income distribution, who earned less than $20,500 in 2012, can hardly afford healthcare costs that average $8,915 per person.4 Many Americans simply cannot afford to pay for any but the most basic healthcare services out of pocket. If healthcare is going to be available to those who need it most, some means must be found to move resources both to those who need the highest cost medical items and services and to those who cannot afford healthcare.

There are a number of approaches available to accomplish this. One is charity. The earliest hospitals were run by religious orders or denominations, or were established through gifts from wealthy benefactors. Charity still plays a role in the provision of healthcare, such as provision through free clinics. The charitable origins of healthcare delivery also survive in the presence of nonprofit, tax-exempt, providers of services. But the need for healthcare services long ago outstripped the resources conceivably available through charitable donations.

The institution most capable of moving resources on a large scale from the healthy to the sick, from the wealthy to the poor, is the government. In virtually all wealthy countries—and even in many poor countries—the government is the primary payer for healthcare items and services. In fact, even in the United States, the government bears almost half the cost of healthcare. In some countries, the government provides healthcare directly, through government-owned hospitals and clinics. In many more countries, public insurance programs pay for healthcare provided by private or quasi-public providers.

Healthcare can also be funded, however, by private insurance. Insurance, by definition, shifts costs from individuals who suffer loss to others who could potentially suffer loss, but in fact do not. Absent regulation, however, private insurance is likely to be risk underwritten, making it very expensive for individuals who are already suffering from costly medical problems, or those who are highly likely to incur high medical costs, such as the elderly or disabled. Moreover, individual private insurance is likely to be unaffordable to lower-income individuals absent some kind of subsidy.

One approach to providing private insurance that has proven quite serviceable, however, is employer-sponsored insurance (ESI). ESI has been the primary means of insuring healthcare in the United States since the middle of the twentieth century. Employers, and in particular large employers, can offer coverage that covers unhealthy as well as healthy and low-wage as well as high-income employees. Employees make up diverse risk pools that permit widespread, affordable coverage. Tax subsidies in the United States have made ESI very attractive to both employers and employees.

ESI cannot cover everyone, however. Many of those most likely to incur high medical costs—the elderly and disabled in particular—are unlikely to be employed. Some of these individuals may have retiree coverage, but it has become increasingly uncommon in the (p. 149) United States. Moreover, many of the poorest Americans do not participate in the workforce, work in low-wage jobs that do not offer health insurance, work part-time or seasonably and are not eligible for ESI, or cannot afford the employee’s share of the ESI premium. Some other approach must be found if they are to have coverage.

Each of these five approaches to paying for healthcare—out-of-pocket, charity, direct government provision, public insurance, and private insurance (including ESI)—can be found in the United States. This article discusses each of these forms of payment for healthcare, analyzing their history, advantages, disadvantages, and current status in the United States. It concludes by considering the 2010 Affordable Care Act and how it incorporates each of these approaches to paying for healthcare coverage.

I Out-of-Pocket Payment

As noted earlier, most Americans pay for most of the goods and services they consume out of pocket, or on credit, which is effectively the same if the debt is eventually paid in full. Many uninsured Americans routinely pay for services entirely out of pocket or on credit, although they sometimes purchase healthcare at a discounted rate.5 Both publicly and privately insured Americans, however, also pay for much of the care they consume out of pocket through cost-sharing.

Cost-sharing takes a number of forms. First, many healthcare consumers must cover a deductible before their insurance begins to pay for services. After individuals satisfy a deductible requirement, they may continue to be obligated to pay a percentage of the additional cost of care through a coinsurance. Alternatively, individuals may owe a flat-dollar payment for a particular service or item—a copayment. If a healthcare provider is not contractually obligated to an insurer to provide services for the amount the insurer is willing to pay, the provider may balance bill the insured in some cases, that is, charge the insured the amount of the provider’s bill that exceeds the amount the insurer is willing to pay. Under federal law, however, health insurance coverage is subject to an out-of-pocket limit, beyond which the insurer must absorb all covered costs for services provided in network.6 Of course, items and services not covered by the insurer, like over-the-counter drugs or alternative medicine, are the responsibility of the insured.

While out-of-pocket costs may in fact be paid out of pocket, many Americans pay for them through special healthcare accounts. Account-based programs allow individuals to claim tax subsidies for some of their out-of-pocket costs and, in some instances, to obtain help from their employers in covering these costs. The federal tax laws have long allowed employees to authorize their employers to direct part of their pay—before it is subject to federal taxes—to flexible spending accounts, which can be used to cover out-of-pocket expenses.7 More recently Congress and the Internal Revenue Service (IRS) have created approaches—health reimbursement accounts8 and health savings accounts—that allow employers to provide (p. 150) employees directly with pretax funds with which to cover out-of-pocket expenses if various conditions are met.9

Before the middle of the twentieth century, the vast majority of healthcare costs were covered out of pocket.10 Providers of goods and services would usually bill for services at the time they were received, although some physicians would extend credit. Extending credit was a risky business, as the patients who recovered might believe they would have in any event, and patients who did not might believe that the physician had provided nothing of value (which was often the case). Physicians also widely practiced price discrimination—charging high prices to their wealthy patients and little or nothing to patients who could not afford their services.

As insurance became common in the mid-twentieth century (see below at Section V), out-of-pocket charges remained common. This was particularly true with indemnity coverage, which did not pay providers directly but rather reimbursed covered individuals once they had paid for services, often not paying the full amount charged. Gaps in coverage were also common—insurance originally covered only hospital care, and, although coverage of surgical and medical services was quite common by the 1960s, coverage of pharmaceutical coverage came even later. Deductibles, coinsurance, and balance billing remained common until the late 1980s.11

With the coming of managed care in the 1980s and 1990s, deductibles diminished or disappeared, and coinsurance was largely replaced with copayments.12 Managed care plans primarily relied on care management strategies such as utilization review or capitation rather than cost-sharing to manage demand. Tiered copayment plans for pharmaceuticals also became common, with low copayments for generic drugs, higher copayments for on-formulary patented drugs, and highest copayments for off-formulary and specialty drugs.

But higher cost-sharing returned with the new millennium. In particular, high-deductible plans became common after the Medicare Modernization Act of 2003 made tax-subsidized health savings accounts available when coupled with high-deductible health plans.13 Individual coverage had always had high deductibles, but as healthcare costs continued to increase, employers also increasingly turned to higher cost-sharing to shift the costs of coverage to employees.

Economists generally believe that high cost-sharing reduces healthcare expenditures. Moral hazard is a persistent problem with insurance. If a product is free to the consumer, the consumer will use more of the product. Without cost-sharing, insurance reduces the cost of a product almost to zero. (The consumer must still spend the time and undergo any discomfort inherent in receiving the service, so it is never entirely free.) Consumers who do not face cost-sharing, therefore, would be expected to use more healthcare items and services than they would if they had to pay out of pocket. Moreover, if consumers must spend a significant amount of their own discretionary funds before insurance begins picking up the tab, they are arguably more likely to shop carefully for healthcare items and services, which could increase price transparency and competition among providers.

(p. 151) The hypothesis that healthcare costs could be reduced by imposing higher cost-sharing was borne out by the Rand Health Insurance Experiment, one of the few controlled trials ever carried out with respect to healthcare financing.14 The experiment, conducted between 1974 and 1982, assigned different groups of insured individuals to different cost-sharing levels. As expected, consumers with higher cost-sharing consumed fewer healthcare services.

But the Rand experiment also demonstrated the problems attendant on high cost-sharing. Consumers reduced consumption of healthcare services adjudged by experts to be medically necessary to the same degree that they reduced unnecessary services. Although most participants did not seem to suffer adverse consequences from the reduction in healthcare services, some, and particularly low-income participants, did. Further studies have shown that high cost-sharing does can cause poorer compliance with drug treatment regimens.15 Individuals with high cost-sharing also tend not to follow up with recommended tests and to avoid seeking medical help, including emergency care, when they need it.16

Moreover, the small percentage of users who account for a high percentage of healthcare costs quickly meet their deductible. Cost-sharing primarily influences costs by discouraging consumers from initiating contact with the healthcare system. Once an insured sees a physician or enters a hospital, professionals largely take over control of provision of items and services. There is also some evidence that reduction in expenditures due to high cost-sharing may be temporary—that it may simply lead to postponing the use of services, which may cost more later.17

The primary problem with high cost-sharing, however, is the financial insecurity that it causes insureds. Individuals with high cost-sharing health insurance tend to incur medical debt, reduce expenditures on other life necessities, be harassed by collection agencies, and declare bankruptcy more often.18 Health insurance exists not only to ensure access to healthcare services but also to guarantee that sickness or injury will not result in impoverishment. High cost-sharing impedes the accomplishment of both of these goals.

II Charity

While out-of-pocket cash payment was historically the primary means of financing healthcare prior to the emergence of health insurance, charitable provision of care always supplemented it. The modern hospital grew out of institutions established by religious orders, local governments, and wealthy donors to care for sick paupers.19 Physicians often provided their (p. 152) services in these institutions gratis, subsidizing their service from their paid practice. These institutions were by and large miserable and dangerous places, in which a patient was as likely to die as to be cured. Respectable people who could afford the cost of medical care had surgeries performed in their homes rather than risk entering one of these institutions.

Over time, the modern hospital emerged. Advances in medical science (and in particular of antisepsis), standardization of hospital care, the changing nature of medical practice, and the emergence of public and private insurance coverage created the modern hospital. The notion of the hospital as a charity, however, has continued in law if not in reality. Most private hospitals are organized as nonprofit corporations, and most nonprofit hospitals are exempt from federal and state taxation.

Under federal income tax law, as well as under the laws of many states, hospitals are not tax exempt as hospitals but rather as “charities” (Horwitz, this volume).20 The meaning of “charitable” under state law varies from state to state, but most states consider it to include service to the community, and more specifically, care for indigents. The definition of “charitable” under federal tax law has changed over time, but under amendments made by the Affordable Care Act (ACA), a hospital claiming tax exemption must regularly assess needs in its community, have and publicize a financial assistance plan, limit its charges to individuals eligible for financial assistance, and limit its billing and collection practices against individuals eligible for financial assistance.21 Additionally, the Emergency Treatment and Active Labor Act requires all hospitals that participate in Medicare and that have an emergency department to provide emergency services without regard for ability to pay, although hospitals can charge for emergency services after they are received.22

Charitable provision of care is not limited to hospitals. Free clinics, through which physicians and other health professionals donate their services to assist lower-income individuals, exist throughout the country. Some pharmaceutical companies also make their drugs available to low-income uninsured individuals at little or no cost.23

While charitable provision of care is valuable to the low-income individuals who directly benefit from it, charity is dependent on the goodwill and resources of those who support it (and on tax subsidies that encourage supporters to give). Charity can be demeaning to those who receive it but have no entitlement to it. Charity cannot begin to meet the needs of all Americans who cannot afford the particular care they need either because their income is too low or because their medical needs are too great. It must be supplemented by public provision or public or private insurance.

III Direct Government Provision

Viewed from an international perspective, direct public provision of care is not uncommon. In particular, hospitals in many other countries are often publicly owned. Perhaps surprisingly, public provision of healthcare used to be more common in the United States than it is (p. 153) now. In 1930, 73% of all hospital beds in the United States were found in public hospitals—primarily mental hospitals.24

A number of U.S. states still have public hospitals, however, which are often operated by counties. Counties also have public health departments that offer some forms of care, like immunizations or well-baby checkups. The federal government has several large programs that provide care directly to special populations. The U.S. Department of Veterans Affairs, for example, operates with more than 1,700 hospitals, clinics, community living centers, domiciliaries, readjustment counseling centers, and other facilities, making medical care available for certain veterans with certain conditions.25 Indian Health Service (HIS) provides services in almost 150 hospitals, clinics, health stations, and urban IHS projects.26 More than 1,100 federally qualified community health centers provide services to lower-income Americans.27

Direct government provision can offer a secure entitlement to care to all residents (or citizens) who qualify for the coverage. International evidence suggests that government provision effectively constrains healthcare costs, because payments for healthcare all flow through a single budget.28 Direct provision also avoids administrative costs of claims presentation and processing that providers and insurers must incur under insurance-based programs and the costs of underwriting and risk bearing that accompany private insurance. Direct government provision of care can improve equity of access to care, as access does not depend on ability to pay. International evidence suggests, however, that health status, and even healthcare, inequities persist in countries that provide healthcare directly.29 Finally, direct government provision can also balance public and population health with individual healthcare needs, as the government as provider is responsible to the entire populace and not just to individual purchasers of care.

Direct provision of care also has disadvantages. Healthcare financed through general revenues must compete for funding with other public needs and will be limited by the government’s capacity to tax. Although all approaches to financing healthcare depend on “rationing,” defined as allocating healthcare resources among claimants who need services, direct government provision results in a particularly public and political rationing process. Direct government provision can also result in a greater constraint on the supply of care than occurs in systems where sources of funding are more diverse and less constrained. Where individuals who can afford to pay for care are denied government provision, they may turn to complementary (and competing) private systems for healthcare finance. This may in turn weaken political support for the public system.

In the United States, public provision programs—for Native Americans, veterans, prisoners, the mentally ill, and lower-income populations—have achieved some successes. However, public provision of care as an approach to providing healthcare generally—true (p. 154) socialization of medicine—faces intense political opposition and has marginal support in the United States. Although it might be possible to expand programs to provide care directly to low-income uninsured Americans, socialization of healthcare generally is not conceivable politically in the United States.

IV Public Health Insurance

Public financing of the provision of care by private providers (or by public providers operated by independent government entities) may be the most common form of healthcare financing worldwide, but is less prominent in the United States than elsewhere. Social health insurance originated in Germany in the 1870s and gradually spread throughout the world. Social insurance funds are legally established quasi-public entities that may be self-governing.

Social insurance countries, such as Germany or France, finance coverage through hypothecated taxes—usually payroll taxes assessed against employers and employees.30 Other countries, for example, Canada and Australia, finance public insurance programs through general revenue funds. Where general revenue funds are used to pay public providers, public insurance can look a great deal like direct government provision.

Attempts to enact public health insurance programs at the state level in the United States began in the Progressive Era, long before private health insurance became common.31 The idea of including health coverage among the social insurance programs covered by the Social Security Act was mooted by the Roosevelt administration during the Great Depression but faced stiff political opposition and did not go far. Repeated attempts to create a universal public health insurance program during the postwar period also proved unsuccessful. Although President Truman campaigned for a national health insurance program more vigorously than had Roosevelt before him, the United States turned rightward following the war, electing a Republican congressional majority.

There was some expansion of public healthcare coverage for the poor after World War II. The Social Security Act Amendments of 1950 for the first time committed the federal government to match, to a very limited extent, state expenditures for in-kind medical services for the elderly, blind, disabled, and families with dependent children. The anticommunist hysteria of the late 1940s and early 1950s and continued opposition from organized medicine, however, put a hold on any further attempts to create a national health insurance program.

With the election of President Kennedy in 1960, efforts to provide healthcare for the elderly were redoubled. The landslide election of President Johnson and of a liberal Democratic Congress following the assassination of President Kennedy finally made health reform possible. In 1965 Congress created the Medicare program to insure hospital and medical services for the elderly and the Medicaid program to pay for healthcare services for public assistance recipients and the medically needy.32

(p. 155) Public insurance advocates had hoped that Medicare and Medicaid would be followed up by expansion of public insurance to the entire population. The 1970s, however, brought little progress as Democrats in Congress failed to reach agreement with the Nixon administration on the way forward. Medicare coverage was expanded to the disabled in 1972, however, and to cover outpatient drugs in 2003. Medicaid was expanded through the 1970s, 1980s, and 1990s to cover pregnant women and children up to age eighteen with incomes below the poverty level. A new program, the Children’s Health Insurance Program (CHIP) was created in 1997 to cover children of families just above the Medicaid level.

Medicare, Medicaid, and CHIP are today the largest public insurance programs in the United States. Medicare covers almost fifty million elderly and disabled Americans and pays 20% of American healthcare expenditures.33 Part A of Medicare is a classic social insurance program, funded through dedicated payroll taxes, but Parts B and D are funded through general revenues and individual premiums. Medicaid covers over sixty-six million Americans and accounts for 15% of American healthcare expenditures.34 It is financed through federal and state general revenue funds.

The great advantage of public insurance is that it enables universal coverage of an entire population. Coverage depends neither on the ability of any individual to pay for coverage nor the willingness of a private insurer to take on the risk of insuring any particular individual. Public insurance programs can create secure rights to healthcare that can be asserted through administrative or judicial proceedings. Public insurers also have considerable market power and thus have far more bargaining power in negotiating with providers and suppliers over price and quality than do individuals, or even private insurers. Of course, the government can through regulation also set the prices that providers charge public insurance programs or standards for the quality of care. International evidence suggests that social insurance programs with dedicated funding sources are less likely to ration visibly as they are not as constrained in expenditures as programs through which governments provide care directly.35

Public insurance also has its limitations, however. Public insurance is subject to the political process. On the one hand, this can mean that public insurance funding can be limited, resulting in resources falling short of demand. On the other hand, special interest provider groups can bring political pressure on public insurance programs to ensure coverage or enhanced payment for their services. Public insurance is also subject to the threat of moral hazard as are all insurance programs.

In the United States we have failed to capture the full benefits of public insurance, as our public insurance programs have remained limited to particular populations—the elderly, the disabled, children, some poor parents, veterans, and Native Americans. These populations (p. 156) have been generally provided secure and affordable healthcare. But the influence of special interests have kept the government from fully using its market power to constrain prices, and public insurance programs have only begun to use their purchasing power to improve quality of care.

V Private Health Insurance

For most Americans, almost 70%, health insurance means private insurance.36 Most of these people are covered though employer-sponsored health insurance, but some purchase private medical insurance in the individual market, while others purchase private insurance to supplement public insurance, particularly Medicare.

Private health insurance is available almost everywhere in the world.37 In some countries, like Canada, private health insurance covers items and services not covered by the public program, such as dental or vision care. In other countries, such as France, private insurance covers cost-sharing imposed by the public insurance program. In yet others, like England, private insurance allows enrollees to avoid queues that might exist for particular services, such as elective surgery for knee replacements. In a few countries, such as Germany, lower- and middle-income individuals must enroll in the public insurance program, but wealthy individuals may instead enroll in private insurance. Finally, in a few countries, notably the Netherlands and Switzerland, most individuals are insured for most healthcare items and services through heavily regulated and publicly subsidized private insurance plans.

Private health insurance came into being in the United States in the first half of the twentieth century as advances in medicine made healthcare of real value and as increases in the cost of healthcare rendered it increasingly less affordable to those with serious medical problems. Modern health insurance was born in 1929, when the Baylor Hospital in Dallas, Texas, launched the first “hospital service plan.”38 Baylor entered into a contract under which white public school teachers paid fifty cents a month into a prepaid hospital services plan with the assurance that they would be covered for up to twenty-one days of hospital care, and a one-third discount on the next 344 days. Hospital service plans spread quickly during the 1930s. In 1936, the American Hospital Association established the Commission on Hospital Services, which ultimately became the Blue Cross Association. Blue Cross plans negotiated “service benefit” contracts with the hospitals, under which the plans would cover a fixed number of days of hospitalization for a per diem fee established in the contract. The success of the hospitals prepaid benefit plans was soon noticed by physicians. In 1939 the first of the physician service benefits plan that came to be known as Blue Shield plans appeared.

As it became increasingly clear in the late 1930s that there was a substantial market for hospital benefits, private commercial insurers entered the group insurance market as well, a market they had previously eschewed as too risky. Unlike Blue Cross plans, commercial insurers covered not only hospital care but also offered surgical coverage. Commercial (p. 157) plans even began to cover medical costs (nonsurgical physician’s services) in the hospital. Commercial health insurance was sold on an indemnity basis. Indemnity policies paid fixed sums per service, which were set beforehand in the insurance contract.

In the booming American economy following World War II, private health insurance coverage expanded dramatically. By 1950, seventy-five million Americans, or half the population, had hospitalization insurance, fifty million had surgical benefits, and twenty-one million had medical benefits.39 By 1965, the year Congress established Medicare and Medicaid, private hospital insurance covered 156 million Americans, about 80% of the population.40

As coverage expanded, it also became more comprehensive.41 In the early 1950s, commercial insurers began to offer major medical coverage, which provided catastrophic coverage for hospital and medical care. Major medical policies usually supplemented basic hospital and surgical-medical coverage. Comprehensive coverage was the next innovation, bundling basic and major medical coverage into a package to provide the most complete coverage available. Finally, during the 1960s and 1970s, insurance coverage began to expand to cover dental care and pharmaceuticals, while basic coverage expanded to include maternity care, mental health, and some preventive services.

This expansion of private health coverage was driven by several concurrent forces. One important trend following World War II was increased employer responsibility for employee health benefits. Unions were at the peak of their strength in the mid-twentieth century, and improved fringe benefits were a high priority for collective bargaining. The National Labor Relations Board clarified in 1949 that employee benefits were included within the “terms of conditions of employment” subject to collective bargaining under the National Labor Relations Act, giving new impetus to union demands for health benefits.42

Nonunion firms also increasingly offered liberal fringe benefits to forestall unionization. Employers saw health insurance as a means to stabilize employment (by making it more difficult for employees to change jobs), to keep workers healthy and productive, and to ward off national social health insurance. By 1988, employers paid for 90% of the cost of individual coverage and 75% of the cost of family coverage.43

Tax policy also played a role in expanding coverage. The 1954 Internal Revenue Code explicitly recognized the nontaxability of employment-related benefits to either the employer or employee.44 Tax subsidies played a particularly important role in increasing the share of premiums covered by employers and the scope of coverage.

A final factor that drove the expansion of employee coverage was the enactment of the Employee Retirement Income Security Act (ERISA) in 1974.45 By blocking the application of state insurance regulation to self-insured plans, ERISA allowed employers that self-insured to escape state premium taxes, insurance mandates (which became common in the early 1980s), capital and reserve requirements, and risk pool contribution requirements. Whereas (p. 158) only 5% of group health claims were paid by self-insured plans in 1975, an estimated 60% of employees were in self-insured plans by 1987.46

One factor that did not play a major role in the expansion of coverage was World War II itself. It is a commonplace misconception that American health insurance began with wage and price controls during World War II. These controls, it is argued, exempted fringe benefits from wage limits and thus stimulated the growth of health insurance. There are a number of reasons, however, to treat with skepticism the assertion that World War II wage and price controls created modern health insurance.47 First, health insurance as an employee benefit was already well established and growing rapidly before the war began. Second, wartime employment and health insurance coverage grew much faster before than after wage and price controls went into effect in 1943. Employment-related insurance coverage increased again rapidly after wage price stabilization controls expired in 1946. The wage stabilization policy was routinely circumvented, as it allowed wage increases that accompanied promotions, which quickly became common. Finally, throughout the war, Blue Cross coverage, the most common form of health insurance, was generally paid by employees rather than employers. By the end of the war only 7.6% of Blue Cross enrollees were participants in groups to which employers contributed.48 Wage controls would have only encouraged broader coverage if employers were paying for that coverage.

Whatever the factors that drove private insurance expansion, by the 1980s the United States seemed to have solved for most Americans through private initiative (supplemented by public programs to cover those whom private markets could never protect), the problem of health security that other nations addressed through social insurance or public provision.

As early as the 1970s, however, America’s private health security system began to unravel. The driving disruptive force was the increase in healthcare costs. Inflation was a general problem during the 1970s, but healthcare costs grew even more rapidly than other costs. Public initiatives were adopted to restrain healthcare costs—including health planning, professional standards review organizations, and, in some states, state rate review—but none achieved great success.49

In response to growing healthcare prices, private health insurers turned from being passive payers for care to becoming care managers. Within a decade, conventional indemnity insurance and service benefit plans gave way to plans—initially called health maintenance organizations (HMOs) and preferred provider organizations (PPOs)—that offered limited provider networks, attempted to review and control utilization, and experimented with incentives structures that would discourage rather than encourage provision of services. For a time, this strategy worked. By the mid 1990s, healthcare cost growth had fallen dramatically; indeed, it briefly fell in line with the growth of the economy generally.50

But cost increases also began to have an impact on coverage. Beginning with the 1980s, the percentage of Americans with health insurance began to decline. The first to lose coverage were retirees, who fell victim to the steady increase in healthcare costs, and after 1990, to a (p. 159) change in accounting standards that required firms to carry the cost of future retiree health obligations on their books as a current liability.51

Small businesses had never insured their employees to the same extent as larger businesses, and as the United States shifted from a manufacturing-based economy to a service-based economy, and concomitantly from large unionized employers to small businesses, the percentage of employees who were insured fell further.

Small groups were underwritten based on the expected claims costs of their members, and coverage was very expensive, even difficult to find, for older groups or groups in hazardous occupations. A number of states enacted laws in the 1990s attempting to make health insurance more accessible for small groups, including laws guaranteeing insurance issuance and renewal, limiting variations in rating among groups, and restricting preexisting condition exclusions.52 A few states even required community rating. The 1996 federal Health Insurance Portability and Accountability Act (HIPAA) established guaranteed issue and renewal requirements throughout the country for small group plans and imposed limits on preexisting condition exclusions in group plans generally.53 Since health insurers could still vary premiums based on health status, however, insurance remained beyond the reach of many small groups.

Even for larger groups, managed care only temporarily stemmed the growth of healthcare costs. There was a serious backlash against the more extreme forms of managed care. Although Congress failed to adopt a national managed care bill of rights when the issue came before it in 2001, most states adopted legislation restraining managed care in the late 1990s.54 As the economy improved in the late 1990s and early 2000s, healthcare moved to broader provider networks and away from strict utilization controls.

Healthcare costs began to rise dramatically again around 2000, however.55 As the economy worsened again in the early 2000s, the cost of employment-related health insurance began to reach levels that employers found intolerable. Employers reacted primarily by increasing employee cost-sharing, although some employers dropped coverage or increased the employee share of health insurance premiums.56 Many employers shifted to high-deductible policies. As health insurance became more costly and less valuable to employees, more employees passed up employment-related coverage. Whereas by 2005, 98% of large firms offered health insurance (60% of employers overall), only 66% of employees of firms that offered health insurance were insured through their own employer.57

The massive layoffs and economic retrenchment that accompanied the economic decline in 2008 and 2009 accelerated the decline in private coverage as well as the expansion of (p. 160) public coverage. By 2009, only 55.8% of Americans had employment-based coverage, down from 62.1% in 1989.58 Retiree coverage declined even more rapidly. Only 28% of large firms that offered health benefits covered retirees in 2010, down from 66% in 1988.59

Nevertheless, tax-subsidized employment-based private health insurance has on the whole worked reasonably well for the United States. It has resulted in broad, reasonably generous, coverage of workers and their dependents. Employee groups covered by large employers, which still include most Americans, are usually big enough and cover enough healthy employees to constitute reasonable risk pools. Laws that have since 1996 prohibited discrimination within groups on the basis of health status and other laws that prohibit discrimination in favor of highly compensated employees (subject to many exceptions) provide some protection for lower-income and less healthy employees.60 Private employment-related insurance is less dependent on political decisions and taxation capacity than public insurance. It is also ideologically acceptable to Americans who oppose government involvement in healthcare.

But employment-sponsored insurance has significant defects as a strategy for covering a nation’s population. Most important, it leaves many people uncovered. As long as employers are free to decide whether or not to offer insurance, many employers, particularly those who employ primarily a low-wage workforce, will not offer it. Part-time, seasonal, temporary, and recently hired employees, as well as retirees, are often uncovered. Prior to the adoption of the ACA, insurers could set premiums for small groups based on claims experience or the health status of employees and exclude some preexisting conditions. This rendered coverage unaffordable for some small groups. Private insurance also imposes high administrative costs, which are bigger for small groups than large.

A small fraction of Americans—about eleven million in early 2014—have been insured through the individual market, where they get insurance directly from an insurer, not from an employer.61 Administrative costs are high in the individual market and premiums have varied sharply from individual to individual based on health status, age, gender, and other underwriting factors. Individual insurance, however, has often been the only alternative available for a number of Americans, including the self-employed, early retirees, the unemployed, part-time and temporary workers, and other individuals who do not have insurance available through their place of employment.

A number of states attempted in the 1990s to reform the individual market, but in most states individual market reforms were less ambitious than small group market reforms.62 In contrast to its more comprehensive reforms for group coverage, HIPAA required only guaranteed renewal and imposed limits on preexisting conditions’ exclusions only for individuals who transferred to the individual market after having group insurance or some equivalent public insurance for a year and a half prior to seeking individual coverage.63 Many (p. 161) states also established high-risk pools for otherwise uninsurable individuals, but premiums were generally high and participation often limited.64

VI The Affordable Care Act

The Affordable Care Act of 2010 (ACA) is a fundamentally conservative law. Like American health reform attempts that preceded it, the ACA does not attempt to revolutionize, unify, or even rationalize healthcare financing in the United States but rather to fill gaps and continue to try to patch up and hold together a diverse nonsystem of healthcare finance.

The ACA makes the greatest changes in the individual market, which was, as just described, the most dysfunctional insurance market prior to the reform. The ACA creates health insurance marketplaces, called exchanges, where individuals can compare and purchase individual coverage.65 Each state is allowed to create its own exchange, but a national fallback exchange is also created for states that decide not to establish their own, which in the end has been most of them. Individual (and small group) coverage is categorized by “metal levels” of platinum, gold, silver, and bronze, based on actuarial value, defined as the percentage of total healthcare costs borne by the insurer as opposed to the percentage paid for out of pocket. Federal premium tax credits are made available to households with incomes between 100% and 400% of the federal poverty level.66 Households with incomes below 250% of the poverty level can also qualify for cost-sharing reduction payments if they purchase a silver-level plan.67

Health insurers that sell policies in the individual market may no longer discriminate based on health status.68 Indeed, they may not consider any factors other than age, geographic location, family size, and tobacco use in setting premiums.69 They must standardize cost-sharing to fit within the four metal tiers.70 Individual market enrollees are also protected by various insurance reforms included in the legislation, including a ban on lifetime and annual dollar limits and rescissions (except for fraud), and an out-of-pocket maximum cap.

The ACA also attempts to shore up and modestly improve employer-sponsored health insurance. Large employers (those who employ more than fifty full-time or full-time-equivalent employees) must offer “minimum essential coverage” to their full-time employees (those who work thirty hours a week or more) or pay a tax of $2,000 for each full-time employee if any uncovered employees receive premium tax credits through the exchange.71 Employers who do not offer affordable and adequate coverage (including coverage of hospital and physician services) must pay a $3,000 tax for each employee who actually gets premium tax credits through the exchange.72 Large employers are not required to cover a particular package of benefits but do face some constraints under the law—for example, if (p. 162) they offer insurance, they must cover preventive services without cost-sharing, limit out-of-pocket costs on certain core benefits, and limit waiting periods to ninety days.

Small employer group coverage is regulated more extensively. Small employers are under no obligation to provide coverage and face no penalties if they fail to do so. Small employers who offer coverage, however, must cover a package of ten essential health benefits (subject to exceptions).73 They also cannot offer coverage that has an actuarial value of less than 60%.74 Small employers can purchase coverage through the Small Business Health Options (SHOP) program. Very small employers with predominantly low-wage employees can qualify for tax credits under the ACA for coverage purchased through the SHOP exchange.75 Insurers may no longer impose preexisting condition requirements on small groups or discriminate among small groups on the basis of health status.76

The ACA, as written, expanded the Medicaid program to cover very low-income Americans who cannot afford commercial health insurance—those with incomes up to 133% of the poverty level (actually 138%, as the law included an automatic 5% income disregard).77 The Supreme Court, however, held that states could decide whether to expand Medicaid or not.78 To date, about half of the states have decided to expand Medicaid and half have decided not to, with the breakdown largely along political lines (Rosenbaum, this volume).

The ACA makes minimal changes in the Medicare program (Marmor, this volume). It expands preventive service coverage and eliminates the “doughnut hole” that had previously required beneficiaries whose prescription drug expenses exceeded a certain level to bear the full cost of drug coverage until they reached the catastrophic coverage level. The ACA pays for coverage expansion in part by limiting the growth of future Medicare expenditures.

In order to expand coverage, the ACA contains an individual responsibility mandate, which requires Americans who are not otherwise insured (through private or public insurance), who can afford coverage for 8% or less of their household income (after taking into account premium tax credits and employer contributions to coverage), and who do not fall into a number of other exceptions to purchase health insurance or pay a tax penalty.79 The individual responsibility requirement is intended to ensure that the individual market, now open to all regardless of health status, will include healthy as well as unhealthy participants, as well as to relieve the burden of uncompensated care that hospitals and other providers have borne. The requirement has proven intensely controversial, however. In a lawsuit brought by twenty-six states and a number of private parties, the Supreme Court upheld the requirement as a valid exercise of the power of Congress to tax and spend, although it also held that Congress did not have the authority to enact the requirement as an exercise of its authority to regulate interstate commerce.80

The ACA is still, four years after its enactment, a work in progress. Enforcement of some requirements, such as the employer mandate, has been delayed. Initial deployment of the exchanges was a disaster—it took two months to get the federal exchange fully open for business, and some of the state exchanges failed to become fully operational during the first year of open enrollment. But by the spring of 2014, over eight million Americans had chosen a (p. 163) health plan through the exchanges, millions more had enrolled in Medicaid, and the number of the uninsured was dropping dramatically.81

Nevertheless, the healthcare financing “system” of the United States, if it can be called a system, remains extraordinarily complex. Healthcare is covered by out-of-pocket expenditures; charity; direct public provision; public insurance; and private insurance, both group and individual. Other developed nations also have a mix of healthcare financing; indeed, most developed nations probably include all of these forms of financing. But most developed nations have a dominant public insurance system, with other forms of financing playing a complementary or supplementary role. In the United States, the dominant form of coverage in terms of numbers covered has been employment-related group private insurance, but the massive public Medicare and Medicaid programs pay for a larger portion of the national healthcare budget than does private insurance because the populations covered by these programs are more in need of services than the privately insured population.

VII Why This Patchwork of Coverage?

Why have we retained this patchwork of coverage in the United States and not developed a consistently private or public system? It is easiest to explain why we have not developed a universal system of private coverage. Given the high cost of healthcare in the United States and the distribution of income, individual private insurance is simply unaffordable for a significant proportion of the population. If health status underwriting is permitted, coverage will also be unaffordable, even unavailable at any price, to individuals with high healthcare needs. Tax-subsidized employer coverage has worked reasonably well in covering a majority of Americans, but it cannot cover the unemployed or unemployable, including the disabled and many of the elderly. As was mentioned at the outset, universal coverage means moving resources from the wealthy to the poor, from the healthy to the sick. Private markets cannot do this; thus some form of public financing is necessary.

Why have we then not moved to universal public coverage, like other nations? There are many answers to this question, no one of them alone wholly explanatory. One reason is the power of interest groups.82 Public health insurance was for decades effectively opposed by organized medicine, which took the lead in opposing expansion from the 1910s until the 1980s. Universal public insurance would today face vigorous opposition from private insurers, whose revenues would be limited or eliminated by public financing.

Public insurance has, moreover, always faced entrenched political opposition and had no powerful constituency of its own.83 The United States has never had a significant socialist or (p. 164) labor party. The Republican Party has opposed even the conservative reforms of the ACA. But even Democrats have offered little support for universal public insurance. Indeed, even a public plan alternative to the private insurance covered under the ACA was unable to get Democratic approval in the Senate. An entirely public insurance system never had more than minimal support, particularly in the Senate.

A national public insurance system would require a dramatic increase in public funding. The United States budget regularly runs a deficit, and the national debt of the country is continually rising. A public healthcare system would require new taxes. Of course, the funding of the current Medicare and Medicaid programs, as well as the tax subsidies currently provided for employment-related insurance and for advance premium tax credits could be folded into a public system. It would be difficult to recapture state revenues spent on Medicaid, however, and the sum total of all funds currently being spent would likely fall well short of the cost of a comprehensive program. Imposing a tax sufficient to fund a public insurance system would likely be politically impossible.

A public insurance system would also run contrary to the ideology of many Americans. Americans tend to like public insurance programs once they are in place but are in general skeptical about government.84 Americans tend to believe that government is inefficient and wasteful and that the private sector does a better job of providing goods and services. Moreover, the current system works reasonably well for most Americans, who will resist the disruption of current arrangements that would be necessary for a move to a universal public system.

American political institutions also make the radical changes that would be necessary to move from a mixed financing system to a largely or exclusively public insurance system very difficult.85 Legislation creating a national public insurance system would have to pass the House, garner sixty votes in the Senate, and be signed by the president—and most likely be blessed by the Supreme Court. The ACA experience demonstrates how difficult this is to achieve, even when the legislation basically affirms rather than changes the current institutions.

Finally, the absence of universal public insurance in the United States is consistent with a general theory of path dependency.86 The theory of path dependency emphasizes the power of inertia within political institutions. Once nations get into the habit of doing things in a particular way, they tend to keep on doing them. This is not purely a theory of historical determinism, however. From time to time, “critical moments or junctures” appear when a confluence of factors in the broader political arena makes major institutional changes in healthcare systems possible. This happened in the United States when both Lyndon Johnson and Barack Obama were elected to office with large congressional majorities following dramatic events—the assassination of President Kennedy and the near-collapse of the American economy. Even on these occasions, however, only gap-filling legislation was possible, not radical restructurings of our insurance system.

(p. 165) VIII Conclusion

So where do we go from here? The United States will almost certainly continue along its current path. Large employers are likely to continue to offer health insurance coverage to their full-time employees. Both the ACA’s employer and individual mandates will increase the pressure on large employers to do so. But the main reasons they will continue to offer coverage are the tax subsidy and the role that benefits play in recruitment and retention of employees. Although some conservatives and libertarians advocate ending the tax subsidy for employment-based insurance, this would be massively disruptive and is unlikely to happen any time soon. Amendments to the ACA to change the definition of full-time employee or of small employer are quite possible, but not a wholesale change in employer coverage.

Many small employers are also likely to continue to offer coverage. Even though small employers are not subject to the mandate, their employees do need to find coverage somewhere because of the individual mandate, and group coverage is still likely to cost less than individual coverage because administrative costs are lower. Small employers that employ predominantly low-wage employees, however, are more likely to drop coverage, as their employees will be able to get a better deal with premium tax credits and cost-sharing reduction payments through the exchanges.87

Employers, large and small, are likely to continue, however, to shift costs to employees. They are likely to require both increased premium contributions from employees and increased cost-sharing in the form of deductibles, coinsurance, and copayments for insured employees. If, as is widely expected, employers begin to move from defined benefit to defined contribution plans, employees may be faced with the choice of either paying more up front for more generous plans or at the time they use services, through higher cost-sharing with less generous plans.

Medicare is likely to continue on course with few major changes. If Republicans take control of Congress and the presidency, and the Senate abolishes the filibuster entirely, it is possible that a premium support proposal could be adopted that would shift more of the costs of the program to beneficiaries. It is likely, however, that cost-saving measures will continue to focus on limiting growth in provider payments and perhaps on assessing more carefully whether covered items and services are cost-effective.

I do not foresee major changes in the Medicaid program either. If Republicans gain control of the Congress and the presidency, they may roll back the ACA Medicaid expansions, and even try to turn Medicaid funding over to the states in block grants without eligibility and benefit requirements. But if the Medicaid expansion remains in place, it is likely that most states will eventually expand. The only arguments for resisting expansion are political, and the moral and economic arguments for expansion will in all likelihood eventually prevail.

(p. 166) The biggest unknown is what will happen to Americans who are not covered by employer-sponsored coverage or public health insurance. If the health insurance market reforms, exchanges, premium tax credits and cost-sharing reduction payments, and individual mandate all remain in place, the number of uninsured will continue to drop while coverage through the exchanges increases. If one or more of these reforms are repealed, however, the number of uninsured is likely to grow again. Republican reform proposals, if adopted, might make health insurance more affordable for higher income, healthy individuals, but are unlikely to address the plight of most uninsured Americans.

For the foreseeable future, however, many American residents are likely to remain uninsured. First, nothing in the ACA or in widely supported modifications to the ACA will provide coverage for millions of undocumented aliens. Second, millions of Americans who cannot find health insurance coverage with premiums at 8% or less of their household income will be exempt from the individual mandate, and many of them will remain uninsured. Finally, an undetermined number of Americans are likely to remain uninsured and either pay the individual mandate penalty or find a way to evade it.

In sum, America will continue to muddle along, with its unique public-private mix. This system has, however, provided reasonably good access to healthcare financing for most Americans. The ACA should expand coverage for many who have heretofore been left out—if it remains in place. But the high cost of private coverage and high cost-sharing that coverage in the individual market, including exchange coverage, imposes on most insureds, will continue to hamper access to care. We continue to tinker with the current system but seem incapable of making the changes that are necessary to cover all Americans.

Notes:

(1) David Cutler, Your Money or Your Life: Strong Medicine for America’s Health Care System (2005).

(2) Anne B. Martin et al., National Health Spending in 2012: Rate of Spending Growth Remained Low for the Fourth Consecutive Year, 33 Health Aff. 67, 68 (2014).

(3) Steven B. Cohen & Namrata Uberoi, Differentials in the Concentration in the Level of Health Expenditures Across Population Subgroups in the U.S., 2010 (2013), available at http://meps.ahrq.gov/mepsweb/data_files/publications/st421/stat421.shtml.

(4) Carmen DeNavas-Walt et al., U.S. Census Bureau, U.S. Department of Commerce, Income, Poverty, and Health Insurance Coverage in the United States: 2012, 9 (2013), available at https://www.census.gov/prod/2013pubs/p60-245.pdf.

(5) I.R.C. § 501(r)(4) requires tax-exempt hospitals to offer free or discounted care to needy patients. I.R.C. § 501(r)(4) (2014).

(6) 42 U.S.C. § 18022(c)(1) (2014).

(7) I.R.C. § 125 (2014).

(8) I.R.S. Notice 2002-45, 2002-02 CB 93; Rev. Rul. 2002-41, 2002-2 C.B. 75.

(9) I.R.C. § 223 (2014).

(10) Timothy Jost, Health Care at Risk: A Critique of the Consumer-Driven Movement 42–53 (2007).

(11) Id. at 65–66.

(12) Id. at 66–68.

(13) I.R.C. § 223(c)(1)(A) (2014).

(14) Joseph P. Newhouse & the Insurance Experiment Group, Free for All?: Lessons from the Rand Health Insurance Experiment (1993).

(15) Dana P. Goldman, Geoffrey F. Joyce, & Yuhui Zheng, Prescription Drug Cost Sharing: Associations with Medication and Medical Utilization and Spending and Health, 298 jama 61 (2007), available at http://www.amcp.org/WorkArea/DownloadAsset.aspx?id=12161.

(16) On emergency department care, see Katy B. Kozhimannil et al., The Impact of High-Deductible Health Plans on Men and Women: An Analysis of Emergency Department Care, 51 Med. Care 639 (2013).

(17) Id.

(18) Alison Galbraith et al., Nearly Half of Families in High-Deductible Health Plans Whose Members Have Chronic Conditions Face Substantial Financial Burden, 30 Health Aff. 322 (2011).

(19) Paul Starr, The Social Transformation of American Medicine 147–154 (1982).

(20) I.R.C. § 501(c)(3) (2014).

(21) I.R.C. § 501(r) (2014).

(22) 42 U.S.C. § 1395dd (2014).

(24) Committee on the Cost of Medical Care, Medical Care for the American People, 82 (1932).e, 82.

(25) See U.S. Department of Veterans Affairs, http://www.va.gov/health/ (last visited Apr. 19, 2014).

(27) See Kaiser Family Foundation, Number of Federally-Funded Federally Qualified Health Centers, http://kff.org/other/state-indicator/total-fqhcs/ (last visited Apr. 19, 2014).

(28) Jost, Health Care at Risk, at 182–183.

(29) Michael Marmot et al., The Strategic Review of Health Inequalities in England Post-2010, Fair Society, Healthy Lives: The Marmot Review (2010), available at http://www.ucl.ac.uk/whitehallII/pdf/FairSocietyHealthyLives.pdf.

(30) Reinhard Busse, Richard B. Saltman, & Hans F. W. Dubois, Organization and Financing of Social Health Insurance Systems: Current Status and Recent Policy Developments, in Social Health Insurance Systems in Western Europe 33, 34 (Richard B. Saltman, Reinhard Busse, & Josep Figueras eds., 2004).

(32) Theodore R. Marmor, The Politics of Medicare (2d ed. 2000).

(33) Kaiser Family Foundation, Total Number of Medicare Beneficiaries, http://kff.org/medicare/state-indicator/total-medicare-beneficiaries/ (last visited Apr. 19, 2014); Martin et al., National Health Spending, at 75.

(34) Kaiser Family Foundation, Total Medicaid Enrollment, FY 2010, http://kff.org/medicaid/state-indicator/total-medicaid-enrollment/ (last visited Apr. 19, 2014); Martin, et al., National Health Spending, at 75.

(35) Timothy Soltzfus Jost, Funding Health Services: The Optimal Balance, in Colleen M. Flood, Mark Stabile, & Carolyn Hughes Tuohy , Exploring Social Insurance: Can a Dose of Europe Cure Canadian Health Finance? 163, 173 (2008).

(36) DeNavas-Walt, U.S. Census Bureau (2013), at 22.

(37) Timothy Stoltzfus Jost, Private or Public Approaches to Insuring the Uninsured: Lessons from International Experience with Private Insurance, 76 N.Y.U. L. Rev. 419 (2001).

(39) Id. at 1–2.

(40) Health Insurance Institute, Source Book on Health Insurance Data, 1966, at 5, 10–13 (1966).

(42) Inland Steel Co. v. N.L.R.B., 170 F.2d 247 (7th Cir. 1948), cert. denied, 336 U.S. 960 (1949).

(43) Jon Gabel et al., Employer-Sponsored Health Insurance in America, 8 Health Aff. 116, 120 (1989), available at http://content.healthaffairs.org/content/8/2/116.full.pdf?origin=publication_detail.

(44) I.R.C. §§ 105, 106 (2014).

(45) 29 U.S.C. §§ 1001, et seq.

(46) Jon Gabel et al., The Changing World of Group Health Insurance, 7 Health Aff. 48, 58 (1988), available at http://content.healthaffairs.org/content/7/3/48.full.pdf?origin=publication_detail.

(47) Jost, Health Care at Risk, at 59–61.

(48) S. Rep. No. 82-359, at 67 (1951).

(49) Timothy Stoltzfus Jost, Eight Decades of Discouragement: The History of Health Care Cost Containment in the USA, 15 F. for Health Econ. & Pol’y 53, 55–58, 63 (2012).

(50) Id. at 67.

(51) Paul Fronstin & Nevin Adams, Employment-Based Retiree Health Benefits: Trends in Access and Coverage, 1997–2010 (2012), available at http://www.ebri.org/pdf/briefspdf/EBRI_IB_10-2012_No377_RetHlth.pdf.

(52) Mark A. Hall, Reforming Private Health Insurance (1994).

(53) Pub. L. 104–191, 110 Stat. 1936 (1996).

(54) Barry Furrow et al., Health Law 492–508 (2d ed. 2000).

(55) Jost, Eight Decades, at 72, 74.

(56) Gary Claxton et al., Kaiser Family Foundation, Employer Health Benefits: 2010 Annual Survey, 38, 72–73, 107, 119 (2010), available at http://kff.org/health-costs/report/employer-health-benefits-annual-survey-archives/#2010.

(57) Gary Claxton et al., Kaiser Family Foundation, Employer Health Benefits: 2005 Annual Survey 32, 40 (2005).

(58) Carmen DeNavas-Walt, U.S. Census Bureau, U.S. Department of Commerce, Income, Poverty, and Health Insurance Coverage in the United States: 2009, at 71 (2010), available at http://www.census.gov/prod/2010pubs/p60-238.pdf.

(60) I.R.C. §§ 105(h), 125(b) (2014).

(61) Gary Claxton et al., Data Note: How Many People Have Nongroup Health Insurance (2014), available at http://kff.org/private-insurance/issue-brief/how-many-people-have-nongroup-health-insurance/.

(62) Furrow et al., Health Law, at 477–478.

(63) 42 U.S.C. §§ 300gg-41, 300gg-42 (2014).

(64) Deborah Chollet, Expanding Individual Health Insurance Coverage: Are High Risk Pools the Answer?, 10 Health Aff. 349 (2002).

(65) 42 U.S.C. §§ 18031 (2014).

(66) I.R.C. § 36B (2014).

(67) 42 U.S.C. §§ 18071 (2014).

(68) 42 U.S.C. § 300gg-4(a) (2014).

(69) 42 U.S.C. § 300gg(a) (2014).

(70) 42 U.S.C. § 18022(d) (2014).

(71) I.R.C. § 4980H(a) (2014).

(72) I.R.C. § 4980H(b) (2014).

(73) 42 U.S.C. § 18022(b) (2014).

(74) 42 U.S.C. § 18022(d) (2014).

(75) I.R.C. § 45R (2014).

(76) 42 U.S.C. §§ 300gg(a), 300gg-3, 300gg-4(a) (2014).

(77) 42 U.S.C. § 1396a(a)(10)(A)(i)(VIII) (2014).

(78) N’l Fed’n of Indep. Bus. v. Sebelius, 132 S.Ct. 2566, 2601–2608 (2012).

(79) I.R.C. § 5000A (2014).

(80) Nat’l Fed’n of Indep. Bus., 132 S.Ct. at 2584–2601.

(81) Timothy Jost, Implementing Health Reform: A Summary Health Insurance Marketplace Enrollment Report, available at http://healthaffairs.org/blog/2014/05/01/implementing-health-reform-a-summary-health-insurance-marketplace-enrollment-report/.

(82) Jill Quadagno, One Nation, Uninsured: Why the U.S. Has No National Health Insurance (2006).

(83) Timothy Stoltzfus Jost, Why Can’t We Do What They Do? National Health Reform Abroad, 32 J. Law. Med. & Ethics 433, 438 (2004).

(84) Id.

(85) Id. at 437–438.

(86) Carolyn Hughes Tuohy, Accidental Logics: The Dynamics of Change in the Health Care Arena in the United States, Britain, and Canada (1999).

(87) Amy Monahan & Daniel Schwarcz, Will Employers Undermine Health Care Reform by Dumping Sick Employees?, 97 Va. L. Rev. 125 (2011).