How elastic is the firm’s demand for health insurance?

Gruber, Jonathan; Lettau, Michael

doi:10.1016/s0047-2727(02)00191-3

Cited by 118 publications

(98 citation statements)

References 18 publications

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“…But this approach also runs into problems. First, tax rates are directly correlated with the attractiveness of offering health insurance; Gruber and Lettau (2004) find a fairly sizeable impact of tax rates on firms' decisions to offer health insurance. 3 Thus, states with higher tax rates will potentially have a very different pool of firms offering insurance than states with lower tax rates, and Cutler's elasticity is estimated on the sample of firms that offer insurance.…”

Section: The Case For and Against Subsidizing Employee Premiumsmentioning

confidence: 99%

Subsidies to employee health insurance premiums and the health insurance market

Gruber

Washington

2005

Journal of Health Economics

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One approach to covering the uninsured that is frequently advocated by policy-makers is subsidizing the employee portion of employer-provided health insurance premiums. But, since the vast majority of those offered employer-provided health insurance already take it up, such an approach is only appealing if there is a very high takeup elasticity among those who are offered and uninsured. Moreover, if plan choice decisions are price elastic, then such subsidies can at the same time increase health care costs by inducing selection of more expensive plans. We study an excellent example of such subsidies: the introduction of pre-tax premiums for postal employees in 1994, and then for the remaining federal employees in 2000. We do so using a census of personnel records for all federal employees from 1991 through 2002. We find that there is a very small elasticity of insurance takeup with respect to its after-tax price, and a modest elasticity of plan choice. Our results suggest that the federal government did little to improve insurance coverage, but much to increase health care expenditures, through this policy change.

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Section: The Case For and Against Subsidizing Employee Premiumsmentioning

confidence: 99%

Subsidies to employee health insurance premiums and the health insurance market

Gruber

Washington

2005

Journal of Health Economics

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“…This methodology follows several other studies in the health insurance literature that use an IV strategy to address potential correlation between tax rates and insurance purchase (e.g. Royalty (2000), Finkelstein (2002), Gruber and Lettau (2004)). The average simulated after-tax price is a valid instrument as it is highly correlated with T AXP RICE, and has no direct bearing on an individual's long-term care insurance purchase decision.…”

Section: Identification Strategymentioning

confidence: 99%

“…13 However, each elasticity estimate is valid only for a local range of coverage rates, and the much higher baseline ownership rates for health insurance (65-70 percent) make 13 One strand of literature examines the elasticity of insurance coverage (Gruber and Poterba (1994), Marquis and Long (1995), Chernew, Frick and McLaughlin (1997), Auerbach and Ohri (2006)). Because the primary channel of health insurance coverage is through the employer, several studies also examine the price elasticity of firms offering insurance (Feldman et al (1997), Marquis and Long (2001), Chernew and Leibowitz (1992), Royalty (2000), Finkelstein (2002), Gruber and Lettau (2004)). …”

Section: Relationship To Other Estimatesmentioning

confidence: 99%

The impact of state tax subsidies for private long-term care insurance on coverage and Medicaid expenditures

Goda

2011

Journal of Public Economics

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In spite of the large expected costs of needing long-term care, only 10-12 percent of the elderly population has private insurance coverage. Medicaid, which provides means-tested public assistance and pays for almost half of long-term care costs, spends more than $100 billion annually on long-term care. In this paper, I exploit variation in the adoption and generosity of state tax subsidies for private long-term care insurance to determine whether tax subsidies increase private coverage and reduce Medicaid's costs for long-term care. The results indicate that the average tax subsidy raises coverage rates by 2.7 percentage points, or 28 percent. However, the response is concentrated among high income and asset-rich individuals, populations with low probabilities of relying on Medicaid. Simulations suggest each dollar of state tax expenditure produces approximately $0.84 in Medicaid savings, over half of which funnels to the federal government.JEL Codes: G22, H31, H51, H71, H75, I11, I18, I38, J14

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“…Stabile (2002) found a similar pattern. Royalty (2000) estimated a tax-price elasticity of about 2.6 overall, which is close to twice what Gruber and Lettau (2000) estimated for firms overall. Nevertheless, the estimates are all within a reasonable range.…”

Section: Firms' Decisions To Offer Health Insurancementioning

confidence: 51%

“…Possibilities include the median worker, the marginal worker (i.e., the last one hired), or some weighted average of the preferences of the workforce (Goldstein and Pauly 1976). Empirical work has yet to fully resolve how employers weigh diverse worker preferences, but Gruber and Lettau (2000) have provided new evidence on this question. They found some support for the median worker model, but also found evidence that the preferences of higher-income workers within a firm carry more weight than those of the lower-income workers.…”

Section: Firms' Decisions To Offer Health Insurancementioning

confidence: 99%

Health Insurance and Labor Markets: Concepts, Open Questions, and Data Needs

Garrett

Chernew²

2008

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This paper reviews the recent economic research on the relationship between health insurance and labor markets in the United States, with an emphasis on research that has emerged since existing major reviews and the aim of identifying the types of data that are needed for this research to progress. We focus on the conceptual and empirical challenges that researchers face in studying these relationships, the data that have allowed this research to proceed, policy-relevant questions that need further study, and the types of data that would help in obtaining better answers to these questions.The vast majority of nonelderly Americans with private health insurance (92%) obtain it through their employer or the employer of a family member.1 For this reason, the labor market and the insurance market are intertwined, raising a number of policy concerns. For example, 18% of nonelderly Americans were uninsured in 2006.2 Most of the uninsured (71%) live in families with at least one full-time worker, and another 11% live in families with one or more part-time workers.

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How elastic is the firm’s demand for health insurance?

Cited by 118 publications

References 18 publications

Subsidies to employee health insurance premiums and the health insurance market

Subsidies to employee health insurance premiums and the health insurance market

The impact of state tax subsidies for private long-term care insurance on coverage and Medicaid expenditures

Health Insurance and Labor Markets: Concepts, Open Questions, and Data Needs

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