publication . Preprint . 2007

Worker Sorting, Taxes and Health Insurance Coverage

Kevin Lang; Hong Kang;
Open Access
  • Published: 01 Apr 2007
Abstract
We develop a model in which firms hire heterogeneous workers but must offer all workers insurance benefits under similar terms. In equilibrium, some firms offer free health insurance, some require an employee premium payment and some do not offer insurance. Making the employee contribution pre-tax lowers the cost to workers of a given employee premium and encourages more firms to charge. This increases the offer rate, lowers the take-up rate, increases (decreases) coverage among high (low) demand groups, with an indeterminate overall effect. We test the model using the expansion of section 125 plans between 1987 and 1996. The results are generally supportive.
Subjects
mesheuropmc: health care economics and organizations
free text keywords: jel:H22, jel:H24, jel:I11, jel:J32
Related Organizations
Funded by
NSF| EHP: Discrimination, Segregation and Wage Differentials in Imperfect Labor Markets
Project
  • Funder: National Science Foundation (NSF)
  • Project Code: 0339149
  • Funding stream: Directorate for Social, Behavioral & Economic Sciences | Division of Social and Economic Sciences

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