Aspects of Health Reform

From 2001 to 2008 the Robert Wood Johnson Foundation funded the Economic Research Initiative on the Uninsured (ERIU), housed at the University of Michigan. ERIU supported original research to spark new discussions on health coverage issues that were useful to policy-makers, policy analysts, researchers and members of the media. For its last act, ERIU commissioned four papers to highlight the core economic principles that policy-makers should understand as they grapple with health care reform. The four papers have been published as a special feature in the Summer 2009 issue of Inquiry.

Economists Thomas Buchmueller and Alan Monheit examine efficiency issues surrounding an employment-based system in the first article, exploring both advantages and disadvantages of employer-sponsored insurance (ESI).

The second article discusses the historical and economic context for decisions regarding health care affordability. Economist Sherry Glied explores why the concept of affordability is not uniform, in addition to explaining how the concept of affordability has been used over time. Adverse selection is the topic of the third article. Economists Katherine Baicker and William Dow discuss the lessons learned and the alternative approaches to adverse selection. They examine individual and employer mandates, health insurance purchasing pools and risk adjustment.

Finally, in the fourth article, economists Kevin Frick and Michael Chernew challenge readers to re-think the impact of moral hazard, or the fact that insurance coverage may lead some individuals to engage in riskier behaviors or may prompt them to consume more medical care due to low costs. The authors note several ways as to why moral hazard may actually increase efficiency.