Self-Employment and the Role of Health Insurance (original) (raw)
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Self-employment and the role of health insurance in the U.S
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We investigate the effect of health insurance on labor market transitions in and out of selfemployment as well as on the likelihood of being self-employed. We consider the role of individual health insurance coverage along with that from a spouse. Next, we examine a series of tax deductions granted to the self-employed through amendments made to the 1986 Tax Reform Act. Using data from the Current Population Survey for 1996-2007, we find significant but small effects of the after-tax health insurance premium on the entry rate, with no effect on exits from self-employment or the likelihood of being self-employed.
Public Health Insurance, Labor Supply, and Employment Lock
The Quarterly Journal of Economics, 2014
We study the effect of public health insurance eligibility on labor supply by exploiting the largest public health insurance disenrollment in the history of the United States. In 2005, approximately 170,000 Tennessee residents abruptly lost public health insurance coverage. Using both across-and within-state variation in exposure to the disenrollment, we estimate large increases in labor supply, primarily along the extensive margin. The increased employment is concentrated among individuals working at least 20 hours per week and receiving private, employer-provided health insurance. We explore the dynamic effects of the disenrollment and find an immediate increase in job search behavior and a steady rise in both employment and health insurance coverage following the disenrollment. Our results suggest a significant degree of "employment lock" -workers employed primarily in order to secure private health insurance coverage. The results also suggest that the Affordable Care Act -which similarly affects adults not traditionally eligible for public health insurance -may cause large reductions in the labor supply of low-income adults.
Health Care Law & Policy eJournal, 2015
This study investigates the prevalence and severity of job immobility induced by the provision of employer-sponsored health insurance – a phenomenon known as 'job-lock'. Using data from the National Longitudinal Survey of Youth from 1994 to 2010, job-lock is identified by measuring the impact of employer-sponsored health insurance on voluntary job turnover frequency. Estimates from a logistic regression with random effects indicate that job-lock reduces voluntary job turnover by 20% per year. These results that are consistent with past research and are also supported by two alternative identification strategies employed in this paper. Our results indicate a persistence of the job-lock effect, despite two major policy interventions designed to mitigate it (COBRA and HIPAA) and signal a fundamental misunderstanding of its causes. Both policies made health insurance more portable between employers, but this paper presents evidence from a quasi-natural experiment to suggest that...
State Health Insurance Subsidies and the Self-Employed
Many of the studies addressing the effectiveness of health insurance subsidies on the take-up rate of the self-employed have focused on either federal policies, such as TRA86 and OECSA, or the federal policies in combination with state policies. We are interested in isolating the effects of the state subsidy programs on take up rates. We are also interested in determining whether state health insurance subsidies have increased the probability that an individual would choose to become self-employed. Using a difference-in-difference-in-difference approach, this natural experiment isolates the effects of the state policies from the federal policy effects by comparing a group of states that subsidize the cost of health insurance with a group of similar states that have not implemented such policies. We find that a self-employed individual in the treatment states was more likely to be covered by private insurance after the state subsidized the cost of health insurance. However, we do not...
Tax incentives as a solution to the uninsured: evidence from the self-employed
Inquiry : a journal of medical care organization, provision and financing, 2013
Between 1996 and 2003, a series of amendments were made to the Tax Reform Act of 1986 that gradually increased the tax deduction for health insurance purchases by the self-employed (SE) from 25 to 100 percent. We study how these changes have influenced the likelihood that a SE person has health insurance coverage as the policyholder. The Current Population Survey is used to construct a data set corresponding to 1995-2005. Both the difference-in-differences and price elasticity of demand estimates suggest that the series of tax deductions did not provide sufficient incentives for the SE to obtain health insurance coverage.
Health Insurance, Expectations, and Job Turnover
This paper attempts to improve our understanding of why many small private employers in the US choose not to offer health insurance to their employees. We develop a theory model, simulate its predictions, and assesses whether the model helps explain empirical patterns of firm decisions to offer insurance. Our theory model provides an explanation for why many small firms do not offer health insurance to their employees even when it may seem attractive to firms, employees and insurers to do so. Small firms have relatively large between-firm variability in expected employee health care costs, and job turnover rates for young and old employees go down differentially when firms offer health insurance. This heterogeneity and differential change in turnover rates mean that expected health costs will increase once health insurance is offered. State regulations on annual rates of premium change, or insurer reluctance to publicly increase premiums rapidly mean that coverage is only offered to...
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Because less healthy employees value health insurance more than the healthy ones, when health insurance is newly offered job turnover rates for healthier employees decline less than turnover rates for the less healthy. We call this adverse job turnover, and it implies that a firm's expected health costs will increase when health insurance is first offered. Health insurance premiums may fail to adjust sufficiently fast because state regulations restrict annual premium changes, or insurers are reluctant to change premiums rapidly. Even with premiums set at the long run expected costs, some firms may be charged premiums higher than their current expected costs and choose not to offer insurance. High administrative costs at small firms exacerbate this dynamic selection problem. Using 1998-1999 MEDSTAT MarketScan and 1997 Employer Health Insurance Survey data, we find that expected employee health expenditures at firms that offer insurance have lower within-firm and higher between-firm variance than at firms that do not. Turnover rates are systematically higher in industries in which firms are less likely to offer insurance. Simulations of the offer decision capturing between-firm health-cost heterogeneity and expected turnover rates match the observed pattern across firm sizes well.