Aspects of Health Reform: Introduction

Article excerpt

From 2001 to 2008, the Robert Wood Johnson Foundation funded the Economic Research Initiative on the Uninsured (ERIU), housed at the University of Michigan. The goals of ERIU were to increase, diversify, and improve the quality, and quantity of economics research on the uninsured, and to translate that research Otto the type of resources that are useful to policymakers, policy analysts, researchers, and members of the media.

One of the primary objectives of ERIU was to fund research projects that explored economic issues about the uninsured in new, yet rigorous and interesting ways. ERIU began by commissioning six critical syntheses of the existing research. These syntheses were intended to inform researchers of what we know and what we don't know about the uninsured. (1) In eight years, ERIU funded more than 50 new research projects on a variety of coverage topics aimed at addressing the gaps in knowledge highlighted in these syntheses. These projects, involving more than 100 researchers, resulted in over 70 conference and seminar presentations worldwide and approximately 40 articles published in peer-reviewed journals. (2)

**********

After the failure of the Clinton health reforms 15 years ago, the research that has come out of the Economic Research Initiative on the Uninsured (ERIU), and the field of health economics more generally, has greatly increased our understanding of why individuals become uninsured and the negative impact of becoming uninsured. This work has laid the foundation for the current debate by under scoring the need for reform. Over this period, the research community has also helped to shape the contours of the debate by providing insight into the dynamics of public and private insurance and developing solutions to help make them work better.

As health care reform again grabs headlines in Washington, familiar themes are sounding. The efficiency-equity trade-off,

central to any allocation decision, and the issues of adverse selection and moral hazard underlie current debates over how reform should be structured. Four papers commissioned by ERIU in this volume of Inquiry highlight these core economic principles that health care policymakers should understand as they grapple with these issues that are critical to effective reform of our health care system.

Efficiency

For a variety of historical reasons, employer-sponsored health insurance (ESI) has long been the mainstay of coverage in the United States. As we enter another round of debate over health care reform, there is a fundamental difference of opinion over what role employers should play in a reformed system. Employers are central to some reform proposals, such as those built around a mandate on employers to provide insurance. Other proposals establish incentives that could, over time, weaken the link between employment and insurance. As we debate different options for reform, one question that must be addressed is whether we should shore up the system of ESI or whether it may be time to move away from this system.

Economists Thomas Buchmueller of the University of Michigan and Alan Monheit of the University of Medicine and Dentistry of New Jersey discuss how we arrived at an employment-based system and the efficiency gains and losses of keeping it. Buchmueller and Monheit provide a conceptual framework for evaluating the impact on ESI of different approaches to health reform. Key to that evaluation is recognizing the effect of ESI on labor market outcomes, including decisions about whether and when to enter the labor force, whether to work full or part time, what type of job to look for, and when to retire.

Buchmueller and Monheit summarize the pros and cons of the link between employment and health insurance as follows:

* Advantages of ESI. There are notable economies of scale resulting from ESI. Having one large purchaser reduces the insurer's administrative costs and the average fixed cost of buying insurance. …