Employer Health Insurance Premium Subsidies Unlikely to Enhance Coverage Significantly

Publication Date: December 2001

Publisher: Center for Studying Health System Change

Author(s): James D. Reschovsky; Jack Hadley

Research Area: Health

Type: Brief

Abstract:

State and local efforts to reduce the number of uninsured workers include three major approaches: public insurance expansions, subsidies paid directly to low-income workers to help pay their share of employer-sponsored insurance premiums or buy individual insurance and subsidies paid directly to small employers to reduce the cost of health insurance premiums. Based on a national study by the Center for Studying Health System Change (HSC), premium subsidies paid directly to small firms are unlikely to significantly reduce the number of uninsured. About 16 million people work in firms with fewer than 50 workers that do not offer health insurance. A hypothetical 30 percent premium subsidy targeted to the employers of these workers—slightly more generous than the average in existing small firm subsidy programs across the country—would extend coverage to only about half a million uninsured workers if implemented nationally.