Workers on the margin: who drops health coverage when prices rise?
We revisit the question of price elasticity of employer-sponsored insurance (ESI) take-up by directly examining changes in the take-up of ESI at a large firm in response to exogenous changes in employee premium contributions. We find that, on average, a 10% increase in the employee's out-of-pocket premium increases the probability of dropping coverage by approximately 1%. More importantly, we find heterogeneous impacts: married workers are much more price-sensitive than single employees, and lower-paid workers are disproportionately more likely to drop coverage than higher-paid workers. Elasticity estimates for employees below the 25th percentile of salary distribution in our sample are nearly twice the average.
Okeke
Edward N
EN
Department of Public Health and Policy, London School of Hygiene and Tropical Medicine, Keppel Street, London, UK WC1E 7HT. edward.okeke@lshtm.ac.uk
Hirth
Richard A
RA
Grazier
Kyle
K
D000328:Adult; D000367:Age Factors; D003365:Costs and Cost Analysis; D005260:Female; D005382:Financing, Personal / Q000191:economics* / Q000706:statistics & numerical data; D006264:Health Benefit Plans, Employee / Q000191:economics* / Q000706:statistics & numerical data; D006301:Health Services Needs and Demand / Q000191:economics* / Q000706:statistics & numerical data; D006801:Humans; D019458:Insurance Coverage / Q000191:economics* / Q000706:statistics & numerical data; D008297:Male; D008875:Middle Aged; D017059:Models, Econometric; D012737:Sex Factors; D012959:Socioeconomic Factors