'Competition' among employers offering health insurance.
Most employees contribute towards the cost of employer-sponsored insurance, despite tax laws that favor zero contributions. Contribution levels vary markedly across firms, and the average contribution (as a percentage of the premium) has increased over time. We offer a novel explanation for these facts: employers raise contribution levels to encourage their employees to obtain coverage from their spouses' employer. We develop a model to show how the employee contribution required by a given firm depends on characteristics of the firm and its work force, and find empirical support for many of the model's predictions.
Dranove
D
D
Northwestern University, Evanston, IL, USA. d-dranove@nwu.edu
Spier
K E
KE
Baker
L
L
D004465:Economic Competition; D006264:Health Benefit Plans, Employee / Q000191:economics*; D015233:Models, Statistical