Policy and Management (original) (raw)
In the United States, health insurance for those under age 65 is provided largely through employers. This paper analyzes how interactions between labor and health insurance markets lead to sub-optimal investments in future health. Our focus is on search frictions in the market for employer based health insurance. We develop a theoretical model of the health insurance market and find that insurance market frictions raise insurance premiums above marginal cost; increase insurance turnover above efficient levels; and depress private returns to investments in future health. Our empirical work examines the rate of insurance turnover using data from The Community Tracking Study and from the administrative records of an insurance company. The high rates of turnover we find are consistent with the presence of substantial market frictions in employer based insurance markets. We conclude by In the United States, health insurance for those under age 65 is provided largely through employers. Th...
Loading Preview
Sorry, preview is currently unavailable. You can download the paper by clicking the button above.