The effects of health shocks on employment and health insurance: the role of employer-provided health insurance
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The effects of health shocks on employment and health insurance: the role of employer-provided health insurance Cathy J. Bradley · David Neumark · Meryl Motika
Received: 25 April 2012 / Accepted: 29 August 2012 / Published online: 15 September 2012 © Springer Science+Business Media New York 2012
Abstract Employment-contingent health insurance (ECHI) has been criticized for tying insurance to continued employment. Our research sheds light on two central issues regarding employment-contingent health insurance: whether such insurance “locks” people who experience a health shock into remaining at work; and whether it puts people at risk for insurance loss upon the onset of illness, because health shocks pose challenges to continued employment. We study how men’s dependence on their own employer for health insurance affects labor supply responses and health insurance coverage following a health shock. We use the
Key messages Informs policies regarding the effects of employment-based health insurance on labor supply and continuity of health insurance among those experiencing health shocks. Men with employer-provided health insurance appear to experience a form of job lock—or “employment lock”—following a health shock because of the ECHI incentives. Prior estimates of “job lock” may understate the true effects of ECHI because they are confounded by a health shock’s negative impact on employment. Those with ECHI are more likely to lose health insurance following some types of health shocks. C. J. Bradley (B) Department of Healthcare Policy and Research, Massey Cancer Center, Virginia Commonwealth University, Richmond, VA, USA e-mail: [email protected] D. Neumark · M. Motika Department of Economics, University of California, Irvine, CA, USA D. Neumark e-mail: [email protected] M. Motika e-mail: [email protected] D. Neumark National Bureau of Economic Research, Cambridge, MA, USA D. Neumark IZA, Bonn, Germany
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Health and Retirement Study (HRS) surveys from 1996 through 2008 to observe employment and health insurance status at interviews 2 years apart, and whether a health shock occurred in the intervening period between the interviews. All employed married men with health insurance either through their own employer or their spouse’s employer, interviewed in at least two consecutive HRS waves with non-missing data on employment, insurance, health, demographic, and other variables, and under age 64 at the second interview are included in the study sample. We then limited the sample to men who were initially healthy. Our analytical sample consisted of 1,582 men of whom 1,379 had ECHI at the first interview, while 203 were covered by their spouse’s employer. Hospitalization affected 209 men with ECHI and 36 men with spouse insurance. A new disease diagnosis was reported by 103 men with ECHI and 22 men with other insurance. There were 171 men with ECHI and 25 men with spouse employer insurance who had a self-reported health decline. Labor supply response differences associated with ECHI—with men wit
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