Worker Sorting, Taxes and Health Insurance Coverage

Kevin Lang

No WP2010-015, Boston University - Department of Economics - Working Papers Series from Boston University - Department of Economics

Abstract: If firms hire heterogeneous workers but must offer all workers insurance bene?fits under similar terms, then 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. This pattern is consistent with trends in the U.S. economy following the creation of section 125 plans.

Pages: 39 pages
Date: 2010-01
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Related works:
Working Paper: Worker Sorting, Taxes and Health Insurance Coverage (2007)
Working Paper: Worker Sorting, Taxes and Health Insurance Coverage (2005)
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