Health Insurance Demand and the Generosity of Benefits: Fixed Effects Estimates of the Price Elasticity
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Paul D. Jacobs
This paper explores a central question in health economics: How sensitive is worker demand for health insurance? After controlling for variables omitted in other analyses, such as the generosity of plan coverage and aspects of worker demand that are constant within firms over time, I estimate a price elasticity (between -0.014 and -0.017) which is smaller than previous estimates. The analysis also finds that employees are more likely to take-up policies with greater insurance protection from hospital expenses, but not for increased coverage for prescription drug or provider office visit expenses. Taken together, increases in worker-paid premiums explain about 60 percent of the fall in take-up of employer policies over time, whereas increases in insurance cost-sharing explain about 10 percent of that change. Changes in employer contributions for health insurance had a limited effect on take-up compared with the amounts employees paid out-of-pocket for premiums. An implication of these findings is that policies which attempt to subsidize employee-paid portions of the premium would be an expensive and potentially ineffective strategy for achieving greater coverage, particularly if the quality of that coverage is not perceived as worthwhile.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Changes in Spousal Health Insurance Coverage and Female Labor Supply Decisions
- Longer Hours and Larger Waistlines? The Relationship between Work Hours and Obesity
- Health Insurance Demand and the Generosity of Benefits: Fixed Effects Estimates of the Price Elasticity
- The Effect of Smoking in Young Adulthood on Smoking Later in Life: Evidence based on the Vietnam Era Draft Lottery
- Why the Poor Get Fat: Weight Gain and Economic Insecurity
- On Inferring Demand for Health Care in the Presence of Anchoring and Selection Biases
- Comparing Health of People with Heart Disease in the United States and Canada
- The Effects of Adolescent Health on Educational Outcomes: Causal Evidence Using Genetic Lotteries between Siblings
Articles in the same Issue
- Article
- Changes in Spousal Health Insurance Coverage and Female Labor Supply Decisions
- Longer Hours and Larger Waistlines? The Relationship between Work Hours and Obesity
- Health Insurance Demand and the Generosity of Benefits: Fixed Effects Estimates of the Price Elasticity
- The Effect of Smoking in Young Adulthood on Smoking Later in Life: Evidence based on the Vietnam Era Draft Lottery
- Why the Poor Get Fat: Weight Gain and Economic Insecurity
- On Inferring Demand for Health Care in the Presence of Anchoring and Selection Biases
- Comparing Health of People with Heart Disease in the United States and Canada
- The Effects of Adolescent Health on Educational Outcomes: Causal Evidence Using Genetic Lotteries between Siblings
