A federal tax credit to encourage employers to offer health coverage.

Many firms that employ low-wage workers cannot afford to offer an employee health plan, and many of the uninsured work for such firms. This article makes the case for an employer tax credit, administered by the Internal Revenue Service, as a way to extend health coverage to uninsured workers and their families. The permanent, fixed-dollar, refundable credit would be available to all low-wage employers (those with average wages of $10 per hour and less), including those already offering coverage. The credit would be graduated depending on average wage: the maximum credit would equal 50% of the cost of a standard benefit package; the minimum would equal 30% of the package. It also would vary by family size and could be used to cover part-time and temporary workers. Participating employers would be required to pay at least 50% of the health insurance premium, proof of which would be shown on firms' tax returns. The paper provides justification for this approach. It closes with a discussion of strengths and weaknesses of this approach and alternative design features.

HealthMarts, HIPCs (health insurance purchasing cooperatives), MEWAs (multiple employee welfare arrangements), and AHPs (association health plans): a guide for the perplexed.

This paper considers how pending proposals to authorize new forms of group purchasing arrangements for health insurance would fit and function within the existing, highly complex market and regulatory landscape and whether these proposals are likely to meet their stated objectives and avoid unintended consequences. Cost savings are more likely to result from increased risk segmentation than through true market efficiencies. Thus, these proposals could erode previous market reforms whose goal is increased risk pooling. On the other hand, these proposals contain important enhancements, clarifications, and simplification of state and federal regulatory oversight of group purchasing vehicles. Also, they address some of the problems that have hampered the performance of purchasing cooperatives. On balance, although these proposals should receive cautious and careful consideration, they are not likely to produce a significant overall reduction in premiums or increase in coverage.

Purchasing cooperatives for small employers: performance and prospects.

Health insurance purchasing cooperatives were established in the early to mid-1990s for the purpose of making health insurance more affordable and accessible for small employers. Extensive interviews at six cooperatives reveal that while some cooperatives enrolled large numbers of small employers, most have won only small market shares and a number have struggled for survival, not always successfully. They have allowed small employers to offer individual employees choice of health plans, but none has been able to sustain lower prices than are available in the conventional market. Among the important impediments to their success are limited support from health plans and conflicts over the role of insurance agents.

A guide to facilitating consumer choice.

Some purchasers and policymakers are advocating models that offer consumers a choice of health plans as a way to help them choose a plan that best meets their needs and to create incentives for health plans to compete on the basis of efficiency, quality, and service. A review of six consumer-choice models indicates that these objectives can be met if purchasers (1) create a level field for comparison through standardized benefits and structured enrollment processes; (2) offer a limited number of plans that meet appropriate selection criteria; (3) provide comprehensive, objective, and reliable consumer information; (4) support the process with education; and (5) hold plans accountable through uniform reporting of performance data.

Key state legislative provisions on purchasing alliances.

In order to function effectively in post-reform healthcare markets, behavioral healthcare professionals must understand and interact with health purchasing alliances. Healthcare reform initiatives based upon the principles of managed competition envision an important role for cooperative health purchasing organizations, or "health alliances," that collect premiums and contract with health plans for the provision of comprehensive health services delivered within the framework of a standardized benefit package. Health purchasing alliances have already been implemented in eight states, and this trend is expected to grow. The following article illustrates the structure and authority of the health alliances that are already in operation, and is presented here to give Behavioral Healthcare Tomorrow journal readers an up-to-date overview of reforming healthcare markets. This matrix arrays recent state laws which we identify as clearly including components of managed competition or purchasing alliances. Other states undoubtedly have elements of reform that include some aspects of these concepts. For example, under legislation, a Vermont health care authority was established and, among other things, charged with developing two comprehensive reform proposals, one of which will involve multipayors and the other a single-payor system. Options will likely embody many of the activities of alliances. Vermont is not included in this matrix because these provisions are still in the developmental stage.

Aggressive regulator or passive price-taker: what role should HIPCs (health insurance purchasing cooperatives) play?

Despite extensive variations on the theme, managed competition continues to be the favored model of federal and state governments in crafting health reform. A critical element in managed competition is the establishment of health insurance purchasing cooperatives (HIPCs), which band together the collective buying power of individuals or employers to give them market "clout". Policymakers must decide whether they want a HIPC to be an aggressive regulator--using its power to force changes among health plans--or a passive price-taker that contracts with plans meeting key criteria.

The ABCs of HIPCs (health insurance purchasing cooperatives).

HIPCs, or health care purchasing cooperatives, are attracting widespread interest as a key element of the managed competition approach to health reform. HIPCs perform several useful roles for individuals and small employers unable to obtain health insurance coverage in the current system by spreading risk more evenly and purchasing coverage in a given region or market area. While HIPCs are generally associated with managed competition, they are also compatible with reform strategies that require employers to pay for coverage or those that provide incentives for expanded coverage.