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Non-Employment and Health Insurance Coverage

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  • Jonathan Gruber
  • Brigitte C. Madrian

Abstract

Low rates of health insurance coverage among the non-employed have motivated consideration of policies to subsidize the purchase of insurance for those who are without a job. But there is little evidence on the extent to which coverage differentials between the employed and the non-employed reflect the effects of job loss or merely different underlying tastes for insurance. If the latter, subsidies may not be successful in increasing the rate of insurance coverage among the non-employed. Furthermore, subsidies which lower the costs of non-employment may increase both the incidence and duration of joblessness. We provide new evidence on these issues by analyzing longitudinal data on 25-54 year-old men over the 1983-1989 period. We have four findings of interest. First, even after modelling differences in underlying tastes for insurance, the likelihood of insurance coverage drops by roughly 20 percentage points following job separation. Second, limited subsidization of the cost of insurance through state laws mandating continued access to employer-provided health insurance for the non-employed increases the likelihood of having insurance while without a job by 6.7 percent. Third, these mandates also increase the number of individuals with spells of non-employment and the total amount of time spent jobless. Finally, at least some of this increased non-employment appears to be spent in productive job search as the availability of continuation coverage is related to significant wage gains among those who separate from their jobs.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5228.

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Date of creation: Aug 1995
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Publication status: published as (Published as "Employment Separation and Health Insurance Coverage") Journal of Public Economics, Vol. 66 (1997): 349-382.
Handle: RePEc:nbr:nberwo:5228

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References

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  1. Topel, Robert H, 1983. "On Layoffs and Unemployment Insurance," American Economic Review, American Economic Association, American Economic Association, vol. 73(4), pages 541-59, September.
  2. Phillip B. Levine, 1993. "Spillover effects between the insured and uninsured unemployed," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(1), pages 73-86, October.
  3. Ehrenberg, Ronald G & Oaxaca, Ronald L, 1976. "Unemployment Insurance, Duration of Unemployment, and Subsequent Wage Gain," American Economic Review, American Economic Association, American Economic Association, vol. 66(5), pages 754-66, December.
  4. Brigitte C. Madrian, 1993. "Employment-Based Health Insurance and Job Mobility: Is There Evidence ofJob-Lock?," NBER Working Papers 4476, National Bureau of Economic Research, Inc.
  5. Kim B. Clark & Lawrence H. Summers, 1979. "Labor Market Dynamics and Unemployemnt: A Reconsideration," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 10(1), pages 13-72.
  6. Cutler, David M & Gruber, Jonathan, 1996. "Does Public Insurance Crowd Out Private Insurance?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(2), pages 391-430, May.
  7. Meyer, Bruce D, 1990. "Unemployment Insurance and Unemployment Spells," Econometrica, Econometric Society, Econometric Society, vol. 58(4), pages 757-82, July.
  8. Gruber, J. & Madrian, B.C., 1994. "Health Insurance Availability and the Retirement Decision," Working papers, Massachusetts Institute of Technology (MIT), Department of Economics 94-04, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Jonathan Gruber & Brigitte C. Madrian, 1993. "Limited Insurance Portability and Job Mobility: The Effects of Public Policy on Job-Lock," NBER Working Papers 4479, National Bureau of Economic Research, Inc.
  10. Alan C. Monheit & Philip F. Cooper, 1994. "Health insurance and job mobility: Theory and evidence," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(1), pages 68-85, October.
  11. Bruce D. Meyer, 1989. "A Quasi-Experimental Approach to the Effects of Unemployment Insurance," NBER Working Papers 3159, National Bureau of Economic Research, Inc.
  12. Ruhm, Christopher J, 1991. "Are Workers Permanently Scarred by Job Displacements?," American Economic Review, American Economic Association, American Economic Association, vol. 81(1), pages 319-24, March.
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Cited by:
  1. Christopher J. Ruhm, 2000. "Are Recessions Good For Your Health?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 115(2), pages 617-650, May.

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