Some Preliminary Thoughts on the Deregulation of Insurance to Advantage the Working Poor

The regulatory framework in which employee benefits products are marketed and consumed by individuals and groups seeking to reduce exposure to covered events creates a set of background rules. These rules influence the way in which insurance products are developed and impact the number of people who will enjoy the protection these insurance products afford. This means that every proposal to regulate an employment related insurance product likely will affect both the quality and quantity of insurance available to consumers. For example, over the past decade, as the public and professionally-interested parties have grappled with the insurance implications of the AIDS epidemic, the very function of insurance and, in particular, risk classification, has come into question. Risk classification rules and other regulatory initiatives have important implications for everyone, particularly those residing in impoverished urban areas. The optimal regulation of employee benefits, specifically those designed to protect against ill health and its consequences, has enormously important implications for the so-called working poor. In many cases the value to low wage employees of their employee benefits exceeds 15 percent of their total compensation