Workers on the Margin: Who Drops Health Coverage When Prices Rise?


Abstract
We revisit the question of price elasticity of employer-sponsored insurance (ESI) take-up by directly examining changes in the take-up of ESI at a large firm in response to exogenous changes in employee premium contributions. We find that, on average, a 10% increase in the employee's out-of-pocket premium increases the probability of dropping coverage by approximately 1%. More importantly, we find heterogeneous impacts: married workers are much more price-sensitive than single employees, and lower-paid workers are disproportionately more likely to drop coverage than higher-paid workers. Elasticity estimates for employees below the 25th percentile of salary distribution in our sample are nearly twice the average.
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DOI 10.5034/inquiryjrnl_47.01.33
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How Do Households Choose Their Employer-Based Health Insurance?Jean Marie Abraham, William B. Vogt & Martin S. Gaynor - 2006 - Inquiry: The Journal of Health Care Organization, Provision, and Financing 43 (4):315-332.

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