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Workers on the Margin: Who Drops Health Coverage when Prices Rise?
Inquiry (2010)
  • Edward Okeke
  • Richard Hirth, University of Michigan - Ann Arbor
  • Kyle Grazier, University of Michigan - Ann Arbor

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.

  • employer sponsored health insurance,
  • demand,
  • price elasticity
Publication Date
Citation Information
Edward Okeke, Richard Hirth and Kyle Grazier. "Workers on the Margin: Who Drops Health Coverage when Prices Rise?" Inquiry Vol. 47 Iss. 1 (2010)
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