title: Cross-subsidization in the market for employment-related health insurance.
abstract: This paper uses data from the 1987 National Medical Expenditure Survey to examine the nature of equilibrium in the market for employment-related health insurance. We examine coverage generosity, premiums, and insurance benefits net of expenditures on premiums, showing that despite a degree of market segmentation, there was a substantial amount of pooling of heterogeneous risks in 1987 among households with employment-related coverage. Our results are largely invariant to (i) firm size and (ii) whether or not employers offer a choice among plans. Our results suggest the need for caution concerning incremental reforms that would weaken the link between employment and insurance without substituting alternative institutions for the pooling of risks.
authors.affiliation: Center for Cost and Financing Studies, Agency for Healthcare Research and Quality, Rockville, MD 20852, USA.
authors.forename: A C
authors.initials: AC
authors.lastname: Monheit
authors.forename: T M
authors.initials: TM
authors.lastname: Selden
mesh_terms: D000328:Adult; D002755:Choice Behavior; D017047:Cost Sharing; D006264:Health Benefit Plans, Employee / Q000458:organization & administration*; D019981:Health Care Sector / Q000458:organization & administration*; D019538:Health Care Surveys; D006801:Humans; D007342:Insurance Benefits; D019458:Insurance Coverage / Q000458:organization & administration; D015271:Insurance Pools / Q000458:organization & administration*; D008875:Middle Aged; D017059:Models, Econometric; D020414:Risk Sharing, Financial / Q000458:organization & administration*; D014481:United States