Premium growth and its effect on employer-sponsored insurance
- 144 Downloads
We use variation in premium inflation and general inflation across geographic areas to identify the effects of downward nominal wage rigidity on employers’ health insurance decisions. Using employer level data from the 2000 to 2005 Medical Expenditure Panel Survey-Insurance Component, we examine the effect of premium growth on the likelihood that an employer offers insurance, eligibility rates among employees, continuous measures of employee premium contributions for both single and family coverage, and deductibles. We find that small, low-wage employers are less likely to offer health insurance in response to increased premium inflation, and if they do offer coverage they increase employee contributions and deductible levels. In contrast, larger, low-wage employers maintain their offers of coverage, but reduce eligibility for such coverage. They also increase employee contributions for single and family coverage, but not deductibles. Among high-wage employers, all but the largest increase deductibles in response to cost pressures.
KeywordsEmployer-sponsored health insurance Premium growth Employer decisions
JEL ClassificationI11 J32
Unable to display preview. Download preview PDF.
- Goldman, D. P., Sood, N., & Leibowitz, A. (2005). Wage and benefit changes in response to rising health insurance. Forum for Health Economics and Policy, 8, Article 3 (Frontiers in Health Policy Research).Google Scholar
- Herring, B., Bundorf, M. K., & Pauly, M. V. (2010). Do workers bear the cost of rising health insurance premiums through lower wage raises? Presentation at the ASHEcon Meeting, Cornell University.Google Scholar
- Leibowitz A. (1983) Fringe benefits in employee compensation. In: Triplett J. (Ed.) Measuring labor costs. NBER, University of Chicago Press, Chicago, pp 371–394Google Scholar
- Levy H. (1998) Who pays for health insurance? Employee contributions to health insurance premiums. Mimeo, University of California at Berkeley, BerkeleyGoogle Scholar
- Pauly M., Herring B. (1999) Pooling health insurance risks. The AEI Press, Washington, D.C.Google Scholar
- Sheiner L. (1999) Health care costs, wages, and aging. Mimeo, Federal Reserve Board of Governors, Washington, DCGoogle Scholar
- Sommers, J. P. (1999). List sample design of the 1996 medical expenditure panel survey insurance component. Methodology Report #06, AHCPR Pub. No. 99-0037. Rockville, MD: Agency for Health Care Policy and Research.Google Scholar