Fast Focus
	Employer-sponsored health insurance creates stable risk pools because healthy employees are less likely to jump ship.
	Insurers can craft more generous health plans for employers with a stable workforce.

Stable Relations

Compelling reseach finds it's the healthy who distort the insurance market, and employer-sponsored health insurance plans are the best cure.

By  Keith Crocker and John Moran

[Page 7 of 7]

“Employers see the benefits of health care coverage in terms of productivity and recognize that lack of medical care is more deleterious to long-term profits,” explains Brian Klepper, a health care analyst based in Atlantic Beach, Fla. He sees an inherent conflict between public policy desire and what carriers see as good business. Klepper’s research shows that, while employers want to control the cost of health care, they do not want to opt out of helping provide it.

A major issue in the individual market is re-underwriting. As in the group market, individuals are placed into large pools when they are first underwritten for individual health insurance policies. As in group plans, some in the pool stay healthy while others grow ill. While it is illegal to re-underwrite an individual once they are established in the pool, there is nothing illegal about a healthy individual voluntarily jumping ship in search of a less expensive plan. And in contrast to the employer-sponsored group plans, there is no attachment to the risk pool—no job is holding a healthy individual back from leaving the group to seek less expensive insurance.

What is left in the old pool are the less healthy individuals, who watch their premiums continue to rise as the group becomes collectively less healthy.

And that’s where employer-sponsored plans have the advantage over the individual market.

Hart is a contributing editor.