The concentration of health expenditures: an update.

An earlier study tracing trends in health spending from 1928 to 1980 found health expenditures concentrated among the top 1 percent of those spending money for health care. In an update to that study, the authors found that that trend toward concentration has increased. In 1987 the tope 1 percent of spenders accounted for 30 percent of health spending, up from 26 percent in 1970 and 29 percent in 1980. In contrast, the bottom half of the population in terms of spending accounted for only 3 percent of total spending in 1987. The average expenditure for the top 1 percent of spenders in 1987 was $47,331. Nearly half of those top spenders in 1987 were elderly. Also, more than 16 percent were black, up from nearly 10 percent in 1980.

Implicit pooling of workers from large and small firms.

Risk pools for small employers have become an integral part of proposals for national health care reform and have been implemented by a number of states. These explicit attempts to pool small employers are occurring at the same time that many small-firm employees obtain health insurance through implicit pooling arrangements as the dependent of a policyholder insured by a large firm. We use data from the 1987 National Medical Expenditure Survey to document the extent of implicit pooling arrangements, to examine whether small-firm employees and their dependents are adverse health risks, and to assess the cost implications of pooling small- and large-firm employees and dependents.

The concentration of health care expenditures, revisited.

In two previous publications, we described the distribution of health care expenditures among the civilian, noninstitutionalized U.S. population, specifically in terms of the share of aggregate expenditures accounted for by the top spenders in the distribution. Our focus revealed considerably skewed distribution, with a relatively small proportion of the population accounting for a large share of expenditures. In this paper we update our previous tabulations (last computed using data more than a decade old) with new data from the 1996 Medical Expenditure Panel Survey (MEPS). Our findings show that the skewed concentration of health care expenditures has remained very stable; 5 percent of the population accounts for the majority of health expenditures.

Insurance coverage and the demand for dental care. Results for non-aged white adults.

The fraction of the U.S. population with private dental insurance coverage increased considerably during the past two decades. Experimental data from the Rand Health Insurance Study have revealed that dental insurance is an important determinant of demand. In this analysis, detailed health insurance data from the National Medical Care Expenditure Survey are used to study the effects of insurance on demand by a standard population of white adults aged 16 to 64. Results from this national probability sample are generally comparable to those from the Rand experimental data. Estimates indicate that the primary effects of dental insurance are to facilitate access to care and to increase dental expenditures. Results are consistent with the notion that first-dollar coverage exerts a greater effect on demand than insurance which requires payment of a deductible. Findings also suggest that insurance affects the mix of dental services received. Loss of dental benefits because of cost containment efforts will result in significant reductions in demand for dental services.

Race/ethnicity and health insurance status: 1987 and 1996.

Health insurance confers important private and social benefits. Disparities in coverage among the population remain an important public policy issue. The authors focus on the health insurance status of white, black, and Hispanic Americans in both 1987 and 1996 and identify gaps in minority health care coverage relative to white Americans. They also investigate the access of workers in these groups to employment-based health insurance. Identified are factors underlying changes in the insurance status of workers during the past decade in terms of changes in population characteristics and structural shifts underlying the demand for and supply of health insurance. The authors find that while coverage has declined for workers in most racial/ethnic groups, the experience of Hispanic males appears to be unique in that changes in their characteristics as well as structural shifts account for their decline in employment-related coverage. Structural shifts dominated the changes in coverage rates for other groups.

Children's health insurance coverage and family structure, 1977-1996.

Using data from a series of nationally representative medical expenditure surveys, the authors document changes in children's health insurance coverage in a period of two decades. Overall, it is found that the proportion of children with private coverage declined, while the proportions publicly insured and uninsured increased. However, when the authors account for differences in family structure, they find striking disparities in children's insurance experiences. Contrary to overall trends, children in single-parent households made significant gains in private health insurance coverage after 1997 and experienced reductions in public insurance. Coincident with Medicaid expansions in the late 1980s, children in two-parent households experienced significant increases in public health insurance. It is found that the rise in the proportion of children who were uninsured in this period was largely a single-parent family phenomenon, and that parents' marital status, employment status, and family income are crucial factors associated with children's insurance status.

Does employment-related health insurance inhibit job mobility?

Most private health insurance in the United States is an employment-related, nonportable fringe benefit. As a result, severing an employment relationship can lead to a loss of such coverage. The risk of losing coverage has been identified as a primary reason for not changing jobs and has shaped the debate over health care reform. This paper examines the relationship between employment-related health insurance and job mobility. We model the likelihood that a worker voluntarily changes employment, based upon insurance status and wages at an initial job, expected insurance status and wages at alternative employment, other fringe benefits, and worker and dependent health status. Analyses of data from the 1987 National Medical Expenditure Survey support the "job lock" hypothesis.

The dynamics of health insurance loss: a tale of two cohorts.

Past research has characterized the uninsured population in fairly static terms. Little is known about the transition between insured and uninsured states, the length of time persons remain uninsured, the existence of multiple spells of health insurance loss, and the extent to which uninsured persons subsequently acquire private or public coverage. In this paper we examine these dynamic aspects of health insurance coverage for cohorts of privately insured and uninsured persons over a 32-month period. The uninsured population was found to be quite heterogeneous, consisting of many persons who lost coverage for relatively short periods of time, others who were periodically without insurance, and many who were persistently uninsured. Implications for public policy initiatives for the uninsured population are also discussed.

Sources of health insurance for the self employed: does differential taxation make a difference?

Health insurance obtained through employment has enabled many workers to take advantage of the favorable tax treatment of employer contributions to these benefits. However, the full deductibility of such employer payments as a business expense and their exemption from income taxation are not available to self-employed owners of unincorporated businesses. We identify the sources of health insurance for the self employed and examine how this disparity in tax treatment is associated with health insurance status. Analyses of data from the 1987 National Medical Expenditure Survey reveal that the differential taxation of the unincorporated self employed is associated with lower rates of employment-related coverage for themselves and their workers.

The contribution of case-mix severity to the hospital cost-output relation.

Analyses of the cost-output relation of hospital care often omit diagnostic case mix from the analytic model. In this study, we examine the bias that arises from the use of either single-dimensional output volume or structural hospital capacity, but not case-mix severity, to analyze hospital costs and outputs. We found that hospitals with higher admission rates tend to admit less severe case mixes, other things equal, which implies that specialized facilities are relatively underutilized. Our finding provides a rationale for regionalization and sharing of costly specialized services and for reimbursement controls on the cost of capital. We conclude that public policy should focus on optimizing the mix of treatment services rather than on hospital size per se.

The dynamics of Medicaid enrollment.

This longitudinal study examines transitions on and off Medicaid in the 1984 Panel of the Survey of Income and Program Participation. A majority of those enrolled at the outset, but just 43% of those enrolled at any time during the 32-month survey, remained on Medicaid throughout. While slightly less than half of those departing the program subsequently enjoyed improved employment, private insurance, and higher incomes, nearly half were still poor and 55% became uninsured, indicating that persons who lost their Medicaid cards were in real danger of being without insurance and financial access to health care--a serious disincentive to get off welfare.

Health insurance choices in two-worker households: determinants of double coverage.

Understanding how households make health insurance choices is of critical importance in evaluating issues of equity and efficiency in health care markets. We consider a largely neglected aspect of such decision making: the decision of families with two working spouses to obtain double coverage. Using data from the 1987 National Medical Expenditure Survey, we find that household decisions to obtain double coverage are especially sensitive to a couple's out-of-pocket premium costs. Our analysis also reveals that households with double coverage have more generous insurance, as reflected in their higher coverage rates for specific types of benefits. We also demonstrate that the presence of duplicate health benefits in double-covered households is not random, possibly reflecting a systematic attempt by working spouses to obtain more extensive coverage.

How are net health insurance benefits distributed in the employment-related insurance market?

The recent health care reform debate has questioned whether the health insurance market effectively pools risks and transfers income across states of health. We use data from the 1987 National Medical Expenditure Survey to examine how net health insurance benefits are distributed in the employment-related insurance market. We find this market to transfer income from those in good health to those with health problems and the tax subsidy from employer health insurance contributions to be a crucial determinant of the net benefit distribution. To the extent society views these transfers as meritorious, our findings suggest caution regarding initiatives to limit or eliminate the tax subsidy.

The employed uninsured and the role of public policy.

Although most private health insurance is obtained through the workplace, important gaps remain in the present system of employment-related coverage. National survey data reveal that more than 9 million persons with employment experience are uninsured, who, with their uninsured dependents, account for three-quarters of all persons who lack coverage. This paper examines the circumstances and characteristics of the employed uninsured, including their opportunity to secure health insurance fringe benefits, their medical care use and expenditures, and the benefits available in private insurance that is not work related. Alternative public policy responses to the problem of lack of health insurance coverage are also considered.

The Medical Expenditure Panel Survey: a national health information resource.

This article describes the Medical Expenditure Panel Survey (MEPS), the third in a series of nationally representative surveys of medical care use and expenditures sponsored by the Agency for Health Care Policy and Research. The MEPS is designed to provide extensive data on the types of health care services American use, how frequently they use them, how much is paid for the services, and who pays for them. It also will provide information on the types and costs of private health insurance available to the U.S. population. The survey is unparalleled in its degree of detail, as well as its ability to link medical care use, payments, and health insurance coverage to specific survey respondents and their families. It allows analysts to examine how individual and family characteristics, including the characteristics of their health insurance, affect medical care use and spending. This article discusses each of the MEPS components, focusing on design enhancements that have been made since the survey was last conducted nearly a decade ago.