The Reallocation of Compensation in Response to Health Insurance Premium Increases
AbstractThis paper examines how compensation packages change when health insurance premiums rise. We use data on employee choices within a single large firm with a flexible benefits plan; an increasingly common arrangement among medium and large firms. In these companies, employees explicitly choose how to allocate compensation between cash and various benefits such as retirement, medical insurance, life insurance, and dental benefits. We find that a $1 increase in the price of health insurance leads to 52-cent increase in expenditures on health insurance. Approximately 2/3 of this increase is financed through reduced wages and 1/3 through other benefits
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9540.
Date of creation: Mar 2003
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Other versions of this item:
- Goldman, Dana P. & Sood, Neeraj & Leibowitz, Arleen, 2005. "The reallocation of compensation in response to health insurance premium increases," Economics Letters, Elsevier, vol. 88(2), pages 147-151, August.
- I2 - Health, Education, and Welfare - - Education
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-03-10 (All new papers)
- NEP-HEA-2003-03-10 (Health Economics)
- NEP-IAS-2003-03-10 (Insurance Economics)
- NEP-LAB-2003-03-10 (Labour Economics)
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