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Household Demand for Employer-Based Health Insurance

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  • Jean Marie Abraham
  • William B. Vogt
  • Martin Gaynor

Abstract

We use the 1996 Medical Expenditure Panel Survey to estimate a model of household demand for employer-based health insurance, explicitly investigating differences in behavior between households with two potential sources of coverage and those with one source. Own and cross-price elasticities are estimated for three types of health plans, including exclusive provider organizations, any provider organizations, and mixed provider organizations. We find that the premium, family size, income, and wealth significantly affect demand. Our elasticity estimates reveal an overall, small behavioral response to changes in price with respect to health plan switching and take-up. Finally, we discuss the implications of our findings with respect to employer benefit design.

Suggested Citation

  • Jean Marie Abraham & William B. Vogt & Martin Gaynor, 2002. "Household Demand for Employer-Based Health Insurance," NBER Working Papers 9144, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:9144
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    References listed on IDEAS

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    Cited by:

    1. Abraham, Jean M. & Feldman, Roger & Carlin, Caroline & Christianson, Jon, 2006. "The effect of quality information on consumer health plan switching: Evidence from the Buyers Health Care Action Group," Journal of Health Economics, Elsevier, vol. 25(4), pages 762-781, July.
    2. Randall Ellis & Elizabeth Savage, 2008. "Run for cover now or later? The impact of premiums, threats and deadlines on private health insurance in Australia," International Journal of Health Economics and Management, Springer, vol. 8(4), pages 257-277, December.
    3. Laura Bucila, 2008. "Employment-Based Health Insurance and the Minimum Wage," Working Papers 0812, College of the Holy Cross, Department of Economics.
    4. Stan McMillen & Kathryn Parr & Xiumei Song & Brian Baird, 2004. "The Kerry-Bush Health Care Proposals: A Characterization and Comparison of their Impacts on Connecticut (Technical Appendix)," CCEA Studies 2004-06, University of Connecticut, Connecticut Center for Economic Analysis.
    5. Royalty, Anne Beeson & Hagens, John, 2005. "The effect of premiums on the decision to participate in health insurance and other fringe benefits offered by the employer: evidence from a real-world experiment," Journal of Health Economics, Elsevier, vol. 24(1), pages 95-112, January.
    6. Tracy L. Regan & Gulcin Gumus, 2006. "Tax Incentives as a Solution to the Uninsured: Evidence from the Self-Employed," Working Papers 0709, University of Miami, Department of Economics, revised Oct 2007.
    7. Panos Kanavos & Marin Gemmill-Toyama, 2010. "Prescription drug coverage among elderly and disabled Americans: can Medicare—Part D reduce inequities in access?," International Journal of Health Economics and Management, Springer, vol. 10(3), pages 203-218, September.
    8. Ángel López-Nicolás & Marcos Vera-Hernández, 2002. "Are tax subsidies for private medical insurance self-financing? Evidence from a microsimulation model for outpatient and inpatient episodes," Working Papers, Research Center on Health and Economics 632, Department of Economics and Business, Universitat Pompeu Fabra, revised Oct 2004.
    9. David Dranove & Anne Gron & Michael J. Mazzeo, 2003. "Differentiation and Competition in HMO Markets," Journal of Industrial Economics, Wiley Blackwell, vol. 51(4), pages 433-454, December.
    10. M. Susan Marquis & Kanika Kapur, 2004. "Family decision making when two workers are offered group coverage," Open Access publications 10197/263, School of Economics, University College Dublin.

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