The Reallocation of Compensation in Response to Health Insurance Premium Increases

Dana Goldman, Neeraj Sood and Arleen Leibowitz

No 9540, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines how compensation packages change when health insurance premiums rise. We use data on employee choices within a single large firm with a flexible benefits plan; an increasingly common arrangement among medium and large firms. In these companies, employees explicitly choose how to allocate compensation between cash and various benefits such as retirement, medical insurance, life insurance, and dental benefits. We find that a $1 increase in the price of health insurance leads to 52-cent increase in expenditures on health insurance. Approximately 2/3 of this increase is financed through reduced wages and 1/3 through other benefits

JEL-codes: I2 (search for similar items in EconPapers)
Date: 2003-03
New Economics Papers: this item is included in nep-hea, nep-ias and nep-lab
Note: EH LE
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Published as Goldman, Dana P., Nerraj Sood and Arleen Leibowitz. "The Reallocation Of Compensation In Response To Health Insurance Premium Increases," Economics Letters, 2005, v88(2,Aug), 147-151.

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