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Health insurance provision and labor contracts for small firms

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  • Chu-Shiu Li
  • Chwen-Chi Liu
  • Yu-Chen Kuo
  • Chen-Sheng Yang

Abstract

Healthcare reform in the USA requires all Americans to buy health insurance and businesses above a certain size to offer healthcare coverage to their employees by 2014. Understanding why some entrepreneurs do not provide employer-based health insurance is important and might help to solve future health insurance problems. Using two unique features which have not yet been discussed in the literature, namely, efficiency–wage theory and a compensation package of monetary wage and health insurance coverage, we provide here a theoretical foundation to why small firms are less likely to offer health insurance and are more likely to have employees with only a weak preference for acquiring health insurance. To reach the goal of health insurance coverage for all, one feasible solution is to allow small firms or individuals to pool together and pay a lower insurance premium. Copyright Springer Science+Business Media, LLC. 2013

Suggested Citation

  • Chu-Shiu Li & Chwen-Chi Liu & Yu-Chen Kuo & Chen-Sheng Yang, 2013. "Health insurance provision and labor contracts for small firms," Small Business Economics, Springer, vol. 40(2), pages 325-334, February.
    • Handle: RePEc:kap:sbusec:v:40:y:2013:i:2:p:325-334
    DOI: 10.1007/s11187-011-9371-2
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    References listed on IDEAS

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    Cited by:

    1. Yu-Chen Kuo & Jia-Huey Lin, 2020. "Picking the lock: how universal healthcare programs influence entrepreneurial activities," Small Business Economics, Springer, vol. 54(1), pages 3-24, January.

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    More about this item

    Keywords

    Health insurance; Labor contract; Fringe benefits; I11; J33; L26;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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