Working Paper: NBER ID: w8878
Authors: Jonathan Gruber; Robin McKnight
Abstract: We explore the causes of the dramatic rise in employee contributions to health insurance over the past two decades. In 1982, 44% of those who were covered by their employer-provided health insurance had their costs fully financed by their employer, but by 1998 this had fallen to 28%. We discuss the theory of why employers might shift premiums to their employees, and empirically model the role of six factors suggested by the theory. We find that there was a large impact of falling tax rates, rising eligibility for insurance through the Medicaid system and through spouses, and deteriorating economic conditions (in the late 1980s and early 1990s). We also find much more modest impacts of increased managed care penetration and rising health care costs. Overall, this set of factors can explain about one-quarter of the rise in employee premiums over the 1982-1996 period.
Keywords: health insurance; employee contributions; employer financing
JEL Codes: H2; I1; J3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Falling tax rates (H29) | Increased employee contributions (J32) |
| Rising eligibility for Medicaid and spousal insurance coverage (G52) | Increased employee contributions (J32) |
| Deteriorating economic conditions (E66) | Increased employee contributions (J32) |
| Increased managed care penetration (I11) | Increased employee contributions (J32) |
| Rising healthcare costs (I11) | Increased employee contributions (J32) |