Where do the sick go? Health insurance and employment in small and large firms

Files in This Item:
File Description SizeFormat 
kapurk_workpap_011.pdf314.84 kBAdobe PDFDownload
Title: Where do the sick go? Health insurance and employment in small and large firms
Authors: Kapur, Kanika
Escarce, José J.
Marquis, M. Susan
Simon, Kosali I.
Permanent link: http://hdl.handle.net/10197/952
Date: Nov-2006
Online since: 2009-03-11T15:01:59Z
Abstract: Small firms that offer health insurance to their employees may face variable premiums if the firm hires an employee with high-expected health costs. To avoid expensive premium variability, a small firm may attempt to maintain a workforce with low-expected health costs. In addition, workers with high-expected health costs may prefer employment in larger firms with health insurance rather than in smaller firms. This results in employment distortions. We examine the magnitude of these employment distortions in hiring, employment, and separations, using the Medical Expenditure Panel Survey from 1996 to 2001. Furthermore, we examine the effect of state small group health insurance reforms that restrict insurers’ ability to deny coverage and restrict premium variability on employment distortions in small firms relative to large firms. We find that workers with high-expected health cost are less likely to be new hires in small firms that offer health insurance, and are less likely to be employed in insured small firms. However, we find no evidence that state small group health insurance reforms have reduced the extent of these distortions. Estimating the magnitude of employment distortions in insured small firms is essential in refining reforms to the small group health insurance market.
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP06/13
Copyright (published version): UCD School of Economics 2006
Subject LCSH: Employer-sponsored health insurance
Insurance, Health--Premiums
Small business--Costs
Other versions: http://www.ucd.ie/economics/research/papers/2006/WP06.13.pdf
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

Show full item record

Google ScholarTM


This item is available under the Attribution-NonCommercial-NoDerivs 3.0 Ireland. No item may be reproduced for commercial purposes. For other possible restrictions on use please refer to the publisher's URL where this is made available, or to notes contained in the item itself. Other terms may apply.