Worker Sorting, Taxes and Health Insurance Coverage
AbstractWe develop a model in which firms hire heterogeneous workers but must offer all workers insurance benefits under similar terms. In equilibrium, some firms offer free health insurance, some require an employee premium payment and some do not offer insurance. Making the employee contribution pre-tax lowers the cost to workers of a given employee premium and encourages more firms to charge. This increases the offer rate, lowers the take-up rate, increases (decreases) coverage among high (low) demand groups, with an indeterminate overall effect. We test the model using the expansion of section 125 plans between 1987 and 1996. The results are generally supportive.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13066.
Date of creation: Apr 2007
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Other versions of this item:
- Kevin Lang & Hong Kang, 2005. "Worker Sorting, Taxes and Health Insurance Coverage," Boston University - Department of Economics - Working Papers Series WP2005-011, Boston University - Department of Economics.
- Kevin Lang, 2010. "Worker Sorting, Taxes and Health Insurance Coverage," Boston University - Department of Economics - Working Papers Series WP2010-015, Boston University - Department of Economics.
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
- I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
- J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-05-12 (All new papers)
- NEP-HEA-2007-05-12 (Health Economics)
- NEP-IAS-2007-05-12 (Insurance Economics)
- NEP-PBE-2007-05-12 (Public Economics)
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