A Political Economy Model of Health Insurance Policy

This paper aims to explain the divergent path of U.S. health policy from other high-income countries. The paper develops a general framework of interest group politics to study how the organization of industry can shape health insurance coverage and greater public involvement in health insurance. Large firms face a higher degree of unionization and provide more health coverage for employees than small firms. Consequently, large firms favor the adoption of a policy of universal health care coverage as a means of divesting health care costs to the public sector. Public aversion to higher taxation counterbalances this effect.