Abstract
Robert Kaestner addresses the tensions between employers and employees in providing consumer choice and health insurance. The author points out that the dominance of employer-sponsored insurance in the private payer market stems from the favorable tax considerations of such insurance that allows employees to obtain insurance without being taxed on its value, and from the market and administrative efficiencies associated with insuring large groups. Given its numerical importance, changes in employer-sponsored insurance related to benefits provided, choice of providers, and employee contributions largely determine the amount of choice non-elderly consumers have with respect to health insurance. More importantly, it is widely believed that the design of, and changes to, employer-sponsored health insurance plans are under the control of the employer with little input from employees. However, Kaestner emphasizes that it is theemployee who pays for health insurance, despite the perception that this is an employer cost. These beliefs lead to the conclusion that consumers don’t have much choice about health insurance and are dependent on the employer. The author’s goal in this essay is to show that this conventional wisdom is incorrect.
Published Version
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