Where Do The Sick Go? Health Insurance and Employment in Small and Large Firms

Kanika Kapur (), José J. Escarce (), M Susan Marquis () and Kosali Ilayperuma Simon ()
Additional contact information
José J. Escarce: Division of General Internal Medicine and Health Services Research, Department of Medicine, David Geffen School of Medicine at UCLA, Los Angeles, CA 90095, USA
M Susan Marquis: RAND, 1200 South Hayes Street, Arlington, VA 22202, USA

Southern Economic Journal, 2008, vol. 74, issue 3, pages 644-664

Abstract: Small firms that offer health insurance to their employees may face variable premiums if the firm hires an employee with high-expected health costs. To avoid expensive premium variability, a small firm may attempt to maintain a workforce with low-expected health costs. In addition, workers with high-expected health costs may prefer employment in larger firms with health insurance rather than in smaller firms. This results in employment distortions. We examine the magnitude of these employment distortions in hiring, employment, and separations using the Medical Expenditure Panel Survey from 1996 to 2001. We find that workers with high-expected health costs are less likely to be new hires in insured small firms and are less likely to be employed in insured small firms. We find no evidence that state small group health insurance reforms designed to restrict insurers' ability to deny coverage and restrict premium variability have reduced the extent of these distortions.

JEL-codes: J21 J63 I10 I18 (search for similar items in EconPapers)
Date: 2008

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Where Do the Sick Go? Health Insurance and Employment in Small and Large Firms (2006)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:sej:ancoec:v:74:3:y:2008:p:644-664

Access Statistics for this article

Southern Economic Journal is edited by Laura Razzolini

More articles in Southern Economic Journal from Southern Economic Association
Contact information at EDIRC.
Series data maintained by Laura Razzolini ().