Medicaidand Medicare are paid for by tax revenues; private insurance is paid for by individuals and employers (with the ACA, individuals will be eligible to receive public funds as subsidy for the purchase of private insurance on the exchanges). Public insurance covers an individual only. Private insurance is often available for individual or family coverage. Most private insurance is employer sponsored and is subsidized by tax exemption. Contirbutions by the employer and the employee are pre-tax contributions, meaning that the premium is not taxed. Howerver, this benefit is tied to employment, and the benefit does not continue once employment with a given company ends. ESI is more likely to be offered to specific types of employees: full-time, higher income, larger businesses, or unionized employees.

Employer Sponsored Insurance (ESI)


Challenges Associated with Employer Sponsored Insurance

For more information about ESI and the growth of premiums and employee contributions, check out Kaiser's employer health benefits survey: http://facts.kff.org/results.aspx?view=slides&detail=53

One way in which employers are trying to control health care costs is to institute employee well-ness programs. Do you think this is a reward for maintaining health or financially penalizing persons who are older or have health problems? See Goldberg, C.: Can My Company's Wellness Program Really Ask Me To Do That? CommonHealth Blog. September 28, 2012.

Individual Insurance Plans


The issue of tax subsidies for ESI is complex.The details are beyond the scope of this course, but if you have an interest in policy/finance you may want to read Tax Subsidies for Health Insurance: