Health Benefits at Work

An Economic and Political Analysis of Employment-Based Health Insurance
Mark V. Pauly
Who really pays for health benefits? An accessible explanation of the economic theory behind this question


The majority of Americans receive their health insurance for themselves and their families through their job. The employee pays a portion of the premium but the employer chooses the type and amount of coverage offered as well as administers the plan. This book addresses the question: Who really pays for employer-arranged health insurance? Are premiums paid from company profits or do employees bear the cost through lower wages? Pauly suggests that this confusion has complicated the debate on public policy and needs to be alleviated.

This work first shows how views taken by business and political leaders during the Clinton health reform proposal debate were affected by this confusion and did not follow the economic view. It then provides a novel, intuitive, but comprehensive outline of the economic theory that bears on this question. Empirical evidence consistent with the economic view is summarized, and the implications of the view for some important issues in health policy and in practical health benefits management are discussed in detail.

Health Benefits at Work explores the political economy of health policy when the stakeholders have an uncertain and possibly incorrect understanding of their actual interests. For the benefits specialist, it provides an accessible treatment of the complex and often counterintuitive economics of health benefits. This will appeal to the health policy community as well as economists and anyone concerned with issues surrounding health insurance in employment settings.

Mark V. Pauly is Professor of Health Care Systems and Insurance and Risk Management, The Wharton School, University of Pennsylvania.

Praise / Awards

  • "This book is refreshing . . . clean and intuitive; the logic devastating."
    —Michael A. Morrissey
  • "The real value of this book is that it cuts the ground out from under some of the bogus arguments made for and against health care reform and helps to identify the real winners and losers that such reform would create. . . . At least this time, thanks to Pauly, we'll know who is really paying and can proceed with an honest debate."
    Health Affairs
  • ". . . an insightful, accessible, and well-written exploration into a unique aspect of the U.S. health care financing system: voluntary employer-sponsored health insurance. . . . In particular, the book is a critical, qualitative analysis of the conflict between how business executives say they respond to government mandates regarding employee health benefits, and what basic labor economic theory predicts will be the market responses to such mandates. . . . While the book should be read by everyone attempting to consider this policy issue, it is also an important work on another level. At a time when economic theory and deductive reasoning as applied to health policy analysis are being attacked from many sides, this book is an excellent reminder that while new adaptive methods and approaches may be useful, there is no substitute for clear thinking and rhetorical expositions of the reassigning process. This book is an outstanding example of the skilled use of economic thinking and rhetorical style as applied by a master of the trade. . . . This book contributes greatly to health policy analysis by articulating the logic supporting the 'economic viewpoint' on issues related to health insurance mandates, large or small. By describing the nature of the debate so clearly, this book should generate additional debate and research on important issues like the distributional consequences of these policy proposals across firms, markets, and time. Readers will find few better examples of the masterful use of economic reasoning and the rhetorical style of political economics."
    —John M. Kuder, Cornell University, Inquiry, Volume 36, No. 1, Spring 1999
  • "This book is highly recommended for economists and employers, but more importantly for policy makers and policy analysts who need to understand the implications of public policy regarding the cost of health benefits in the workplace."
    Journal of Health Politics, Policy and Law, Volume 24, No. 2, April 1999
  • "Pauly's theory of the effect of health benefits on compensation is not new to economists. However, he presents it in the most detailed, formalized, and thorough manner offered yet, an accomplishment that noneconomists must take seriously. The book is highly recommended for economists and employers, but more importantly for policy makers and policy analysts who need to understand the implications of public policy regarding the cost of health benefits in the workplace."
    —Paul Fronstin, Employee Benefit Research Institute, Journal of Health Politics, Policy and Law, April 1999
  • Winner: American Risk and Insurance Association's 1999 Kulp-Wright Award

Product Details

  • 6 x 9.
  • 200pp.
Available for sale worldwide

  • Paper
  • 1999
  • Available
  • 978-0-472-08644-3

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  • $34.95 U.S.