Cross-subsidization in the market for employment-related health insurance
This paper uses data from the 1987 National Medical Expenditure Survey to examine the nature of equilibrium in the market for employment-related health insurance. We examine coverage generosity, premiums, and insurance benefits net of expenditures on premiums, showing that despite a degree of market segmentation, there was a substantial amount of pooling of heterogeneous risks in 1987 among households with employment-related coverage. Our results are largely invariant to (i) firm size and (ii) whether or not employers offer a choice among plans. Our results suggest the need for caution concerning incremental reforms that would weaken the link between employment and insurance without substituting alternative institutions for the pooling of risks. Copyright © 2000 Published in 2000 by John Wiley & Sons, Ltd.
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Volume (Year): 9 (2000)
Issue (Month): 8 ()
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References listed on IDEAS
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- David M. Cutler & Richard J. Zeckhauser, 1998.
"Adverse Selection in Health Insurance,"
in: Frontiers in Health Policy Research, Volume 1, pages 1-32
National Bureau of Economic Research, Inc.
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- David M. Cutler & Sarah J. Reber, 1998. "Paying for Health Insurance: The Trade-Off between Competition and Adverse Selection," The Quarterly Journal of Economics, Oxford University Press, vol. 113(2), pages 433-466.
- David Cutler, 1994. "Market Failure in Small Group Health Insurance," NBER Working Papers 4879, National Bureau of Economic Research, Inc.
- Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
- Ellis, Randall P, 1989. "Employee Choice of Health Insurance," The Review of Economics and Statistics, MIT Press, vol. 71(2), pages 215-23, May.
- Gruber, Jonathan, 1994. "The Incidence of Mandated Maternity Benefits," American Economic Review, American Economic Association, vol. 84(3), pages 622-41, June.
- Alan C. Monheit & Philip F. Cooper, 1994. "Health Insurance and Job Mobility: Theoryand Evidence," ILR Review, Cornell University, ILR School, vol. 48(1), pages 68-85, October.
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