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Journal Issue: Health Care Reform Volume 3 Number 2 Summer/Fall 1993

Guaranteed Coverage with Multiple Insurers: Closing Gaps and Easing Transitions
Kevin H. Haugh Gary J. Claxton


While today's health care financing system consists of a patchwork of many diverse public and private payers, the system rests overwhelmingly on employment-based health coverage for children as well as adults. Nearly two-thirds of nonelderly adults are presently covered through a private, employment-based health plan; 60% of children are covered as dependents of parents with employer-based coverage.1

Yet many adults and children counted as insured at a given point in time have faced or will face difficulties in obtaining or maintaining a continuous source of coverage. Coverage problems arise from, among other things, exclusions and limitations related to health problems, rating practices that distinguish the healthy from the sick, waiting periods for people changing jobs, and conflicts over coordinating coverage when more than one health plan may be responsible for payment for a service.

While many of these gaps and practices have existed for years, they have recently received more attention as they have become more common and their burden on individuals has become greater. Many practices can affect all individuals covered through the employment-based system; however, some primarily affect those who are covered indirectly as dependents, such as children.

A number of proposals have been advanced to address the gaps and related deficiencies in the private health insurance system, ranging from reforms of the small-employer health insurance market to broader and more fundamental restructuring of the way health care is financed and delivered. Whether pursuing fundamental or more modest change, it is critical to understand the problems with the present system, some of which may be amenable to rather easy and straightforward changes, while others may be more difficult to remedy.

In considering the effects of the current employer-based health insurance system on children, it is useful to focus on several related areas:


  • Decisions employers make regarding health benefits for employees and their families;
  • Effects of insurance market and other health benefit practices on the availability, stability, and continuity of coverage for families;
  • Health insurance and benefit policies which primarily affect children; and
  • Programs or market reforms that address many of the problems affecting children and their family members.