In the current death spiral of private health insurance, about 10 percent of employers are dropping health coverage each year, while less than 5 percent begin to offer coverage. Between 1987 and 1991, the portion of Americans covered by individually purchased health insurance dropped 40 percent. Yet the amount paid by employers doubled from 1987 to 1992.

Despite the trend to scapegoat insurers, Mark Hall demonstrates that this disintegration of the insurance market has not resulted from price gouging. Instead, the insurance industry has been in the vanguard in structuring, pricing, and marketing its product.

From the premise that the United States will continue to rely on private financing for health care, the author explains why insurance of any sort exists and clarifies the social benefits from an efficient health insurance market. Along the way, he surveys open enrollment, continuity of coverage, managed competition, community rating, rating bands, purchasing cooperatives, tax equity, personal responsibility, biased selection, and risk adjustment.

Mark A. Hall is a professor of law and public health at Wake Forest University.