Which Employers Alter Offers of Health Insurance in Response to Minimum Wage Increases? Evidence From the Medical Expenditure Panel Survey - Insurance Component

Offers of health insurance vary significantly across firm and establishment characteristics, including firm size, workforce sex, and workforce age (Agency for Healthcare Research and Quality, 2024, Table I.A.2; Abraham et al., 2016). Low-wage workers in particular are less likely to receive health insurance from their employer, and employers tend to roll back benefits as minimum wages rise (Meiselbach and Abraham, 2023; Marks, 2011). This study aims to identify the effects by employer and workforce characteristics of minimum wage increases on employer-provided benefits using restricted-use data from the Medical Expenditure Panel Survey-Insurance Component (MEPS-IC). I use a two-way fixed effects approach, exploiting state legislation variation, to identify changes in the rates of employers offering health insurance and employer and employee characteristics associated with changes in health insurance offers. I study employer and employee characteristics for which minimum wage responses may differ due to differences in health insurance costs, impacts of the Affordable Care Act and other policies and legislation, and employee preferences for health insurance. I find that establishments alter offers of health insurance in response to the minimum wage differently based on firm size and workforce gender and age. Small firms drive reductions in health insurance offers as the minimum wage increases, and reductions are smaller among workforces with a greater share of female or older workers, who more highly value employer-provided health insurance.