Price and Spouse’s Coverage in Employee Demand for Health Insurance.

Abstract

The decline in health insurance coverage over the last two decades is a matter of national concern. The vast majority of insured individuals under age 65 obtain coverage from their employer or as dependents of a family member with group-sponsored health insurance. Recent evidence suggests that the decrease in coverage among full-time workers has resulted not so much from declining employer offers but rather from reduced take-up (Henry S. Farber and Helen Levy, 2000). The reasons for this change in employee behavior are not yet understood. Resolving this question is important for public policy because the two most likely explanations (the rise in employee insurance premiums and the increase in coverage of spouses under their own plans over this period) have different policy implications. Table 1 shows these trends by gender for full-time married workers from 1988 to 2001. The proportion of workers paying part or all of total insurance premiums increased nearly 20 percent, and the proportion with spouses covered under their own employer plans increased 30 percent among women and doubled among men. Table 1 also confirms that, while offer and eligibility rates declined somewhat for full-time workers over this period, take-up rates fell substantially among eligible workers. Concern among policymakers has focused on whether rising employee costs have forced workers to opt out of offered coverage. In this case, the number of uncovered individuals and