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Accounting for the Slowdown in Employer Health Care Costs

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  • Alan B. Krueger
  • Helen Levy

Abstract

The most widely used measure of employer health care costs, the health insurance component of the Employment Cost Index, indicates that cost growth has decelerated since 1989. In recent years employer expenditures per hour worked have even declined in nominal dollars. This paper analyzes the components of changes in employers' health care costs over the 1992-94 and 1987-93 periods. We find that employer costs have decreased primarily as a result of a steady decrease in the fraction of workers with coverage and a large decrease in the rate of growth of insurance premiums. We conclude that the shift to managed care does not appear to be directly responsible for significant cost savings because managed care premiums are almost as high as those for fee-for-service plans, on average. Finally, we note that there is a significant need for improved data collection in this area.

Suggested Citation

  • Alan B. Krueger & Helen Levy, 1997. "Accounting for the Slowdown in Employer Health Care Costs," NBER Working Papers 5891, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5891
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    Cited by:

    1. Scott J. Adams, 2004. "Employer-provided Health Insurance and Job Change," Contemporary Economic Policy, Western Economic Association International, vol. 22(3), pages 357-369, July.
    2. David M. Cutler & Louise Sheiner, 1998. "Managed Care and the Growth of Medical Expenditures," NBER Chapters,in: Frontiers in Health Policy Research, Volume 1, pages 77-116 National Bureau of Economic Research, Inc.
    3. Thomas Buchmueller, 1999. "Fringe benefits and the demand for part-time workers," Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 551-563.
    4. Helen Levy & Thomas DeLeire, 2003. "What Do People Buy When They Don't Buy Health Insurance And What Does that Say about Why They are Uninsured?," NBER Working Papers 9826, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • I10 - Health, Education, and Welfare - - Health - - - General

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