Working Paper: NBER ID: w9540
Authors: Dana P. Goldman; Neeraj Sood; Arleen A. Leibowitz
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
Keywords: No keywords provided
JEL Codes: I2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| health insurance premium increase (G52) | health insurance expenditures (H51) |
| health insurance premium increase (G52) | take-home wages (J31) |
| health insurance premium increase (G52) | other benefits (J32) |
| health insurance expenditures increase (H51) | take-home wages (J31) |
| health insurance expenditures increase (H51) | other benefits (J32) |
| health insurance premium increase (G52) | total compensation allocation (M52) |