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The Effect of Premiums on the Small Firm's Decision to Offer Health Insurance

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  • Roger Feldman
  • Bryan Dowd
  • Scott Leitz
  • Lynn A. Blewett
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    Abstract

    Many small firms (fewer than 50 employees) do not offer health insurance. We investigated the role of premiums in the small firm's decision to offer health insurance, using data from a 1993 survey of 2,000 small firms in Minnesota. Selectively-corrected equations were estimated to predict the premiums faced by firms offering and not offering insurance. The elasticity of demand for health insurance, calculated at the mean of the data, was -3.91 for single coverage and -5.82 for family coverage. We contrast these results to the much lower responsiveness found in experimental studies and suggest that our findings are more likely to model the small firm's demand for health insurance.

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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 32 (1997)
    Issue (Month): 4 ()
    Pages: 635-658

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    Handle: RePEc:uwp:jhriss:v:32:y:1997:i:4:p:635-658

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    Web page: http://jhr.uwpress.org/

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    Cited by:
    1. Gopi Shah Goda, 2010. "The Impact of State Tax Subsidies for Private Long-Term Care Insurance on Coverage and Medicaid Expenditures," NBER Working Papers 16406, National Bureau of Economic Research, Inc.
    2. Jonathan Gruber & Michael Lettau, 2000. "How Elastic is the Firm's Demand for Health Insurance?," NBER Working Papers 8021, National Bureau of Economic Research, Inc.
    3. Nan L. Maxwell, 2013. "The ACA, Health Care Costs, and Disparities in Employer-Sponsored Health Insurance," Mathematica Policy Research Reports 7683, Mathematica Policy Research.
    4. Kiil, Astrid, 2012. "Private health insurance and the use of health care services - a review of the theoretical literature with application to voluntary private health insurance in universal health care systems," COHERE Working Paper 2012:1, COHERE - Centre of Health Economics Research, University of Southern Denmark.
    5. Daysal, N. Meltem, 2012. "Does uninsurance affect the health outcomes of the insured? Evidence from heart attack patients in California," Journal of Health Economics, Elsevier, vol. 31(4), pages 545-563.
    6. John Cawley & Kosali I. Simon, 2003. "Health Insurance Coverage and the Macroeconomy," NBER Working Papers 10092, National Bureau of Economic Research, Inc.
    7. Alan C. Monheit & Jessica Primoff Vistnes, 2006. "Health Insurance Enrollment Decisions: Preferences for Coverage, Worker Sorting, and Insurance Take Up," NBER Working Papers 12429, National Bureau of Economic Research, Inc.
    8. Gruber, Jonathan & Lettau, Michael, 2004. "How elastic is the firm's demand for health insurance?," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1273-1293, July.
    9. Jean Marie Abraham & Thomas DeLeire & Annne Beeson Royalty, 2007. "Health Insurance, Pensions, and Paid Leave: Access to Health Insurance at Small Firms in a Broader Benefit Context: Working Paper 2007-08," Working Papers 18725, Congressional Budget Office.
    10. Shore-Sheppard, Lara & Buchmueller, Thomas C. & Jensen, Gail A., 2000. "Medicaid and crowding out of private insurance: a re-examination using firm level data," Journal of Health Economics, Elsevier, vol. 19(1), pages 61-91, January.

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