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Accounting for the Slowdown in Employer Health Care Costs

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  • Alan B. Krueger
  • Helen Levy

Abstract

The most widely used measure of employer health care costs, the health insurance component of the Employment Cost Index, indicates that cost growth has decelerated since 1989. In recent years employer expenditures per hour worked have even declined in nominal dollars. This paper analyzes the components of changes in employers' health care costs over the 1992-94 and 1987-93 periods. We find that employer costs have decreased primarily as a result of a steady decrease in the fraction of workers with coverage and a large decrease in the rate of growth of insurance premiums. We conclude that the shift to managed care does not appear to be directly responsible for significant cost savings because managed care premiums are almost as high as those for fee-for-service plans, on average. Finally, we note that there is a significant need for improved data collection in this area.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 5891.

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Date of creation: Jan 1997
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Publication status: published as Proceedings of the National Tax Association (1997): 61-75.
Handle: RePEc:nbr:nberwo:5891

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Cited by:
  1. David M. Cutler & Louise Sheiner, 1998. "Managed Care and the Growth of Medical Expenditures," NBER Chapters, in: Frontiers in Health Policy Research, volume 1, pages 77-116 National Bureau of Economic Research, Inc.
  2. repec:fth:prinin:416 is not listed on IDEAS
  3. Helen Levy & Thomas DeLeire, 2003. "What Do People Buy When They Don't Buy Health Insurance And What Does that Say about Why They are Uninsured?," NBER Working Papers 9826, National Bureau of Economic Research, Inc.

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