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The effects of health shocks on employment and health insurance: the role of employer-provided health insurance

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  • Cathy Bradley
  • David Neumark
  • Meryl Motika
Abstract
Employment-contingent health insurance (ECHI) has been criticized for tying insurance to continued employment. Our research sheds light on two central issues regarding employment-contingent health insurance: whether such insurance “locks” people who experience a health shock into remaining at work; and whether it puts people at risk for insurance loss upon the onset of illness, because health shocks pose challenges to continued employment. We study how men’s dependence on their own employer for health insurance affects labor supply responses and health insurance coverage following a health shock. We use the Health and Retirement Study (HRS) surveys from 1996 through 2008 to observe employment and health insurance status at interviews 2 years apart, and whether a health shock occurred in the intervening period between the interviews. All employed married men with health insurance either through their own employer or their spouse’s employer, interviewed in at least two consecutive HRS waves with non-missing data on employment, insurance, health, demographic, and other variables, and under age 64 at the second interview are included in the study sample. We then limited the sample to men who were initially healthy. Our analytical sample consisted of 1,582 men of whom 1,379 had ECHI at the first interview, while 203 were covered by their spouse’s employer. Hospitalization affected 209 men with ECHI and 36 men with spouse insurance. A new disease diagnosis was reported by 103 men with ECHI and 22 men with other insurance. There were 171 men with ECHI and 25 men with spouse employer insurance who had a self-reported health decline. Labor supply response differences associated with ECHI—with men with health shocks and ECHI more likely to continue working—appear to be driven by specific types of health shocks associated with future higher health care costs but not with immediate increases in morbidity that limit continued employment. Men with ECHI who have a self-reported health decline are significantly more likely to lose health insurance than men with insurance through a spouse. With the passage of health care reform, the tendency of men with ECHI as opposed to other sources of insurance to remain employed following a health shock may be diminished, along with the likelihood of losing health insurance. Copyright Springer Science+Business Media New York 2012

Suggested Citation

  • Cathy Bradley & David Neumark & Meryl Motika, 2012. "The effects of health shocks on employment and health insurance: the role of employer-provided health insurance," International Journal of Health Economics and Management, Springer, vol. 12(4), pages 253-267, December.
    • Handle: RePEc:kap:ijhcfe:v:12:y:2012:i:4:p:253-267
    DOI: 10.1007/s10754-012-9113-2
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    References listed on IDEAS

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    1. Bradley, Cathy J. & Neumark, David & Barkowski, Scott, 2013. "Does employer-provided health insurance constrain labor supply adjustments to health shocks? New evidence on women diagnosed with breast cancer," Journal of Health Economics, Elsevier, vol. 32(5), pages 833-849.
    2. Kanika Kapur, 1998. "The Impact of Health on Job Mobility: A Measure of Job Lock," ILR Review, Cornell University, ILR School, vol. 51(2), pages 282-298, January.
    3. Brigitte C. Madrian, 1994. "Employment-Based Health Insurance and Job Mobility: Is there Evidence of Job-Lock?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(1), pages 27-54.
    4. Kevin T. Stroupe & Eleanor D. Kinney & Thomas J.J. Kniesner, 2001. "Chronic Illness and Health Insurance-Related Job Lock," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 20(3), pages 525-544.
    5. Jonathan Gruber & Brigitte C. Madrian, 1994. "Health Insurance and Job Mobility: The Effects of Public Policy on Job-Lock," ILR Review, Cornell University, ILR School, vol. 48(1), pages 86-102, October.
    6. Scott J. Adams, 2004. "Employer‐provided Health Insurance and Job Change," Contemporary Economic Policy, Western Economic Association International, vol. 22(3), pages 357-369, July.
    7. Courtney C. Coile, 2004. "Health Shocks and Couples' Labor Supply Decisions," NBER Working Papers 10810, National Bureau of Economic Research, Inc.
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    Cited by:

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    2. David Candon, 2019. "The joint effect of health shocks and eligibility for social security on labor supply," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(7), pages 969-988, September.
    3. Candon, David, 2018. "The effect of cancer on the labor supply of employed men over the age of 65," Economics & Human Biology, Elsevier, vol. 31(C), pages 184-199.
    4. Michael S. Kofoed & Wyatt J. Frasier, 2019. "[Job] Locked and [Un]loaded: The Effect of the Affordable Care Act Dependency Mandate on Reenlistment in the U.S. Army," Upjohn Working Papers 19-300, W.E. Upjohn Institute for Employment Research.
    5. Joachim Marti & Michael R. Richards, 2017. "Smoking Response to Health and Medical Spending Changes and the Role of Insurance," Health Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 305-320, March.
    6. O’Hara Brett & Medalia Carla & Maples Jerry J., 2019. "Modeling a Bridge When Survey Questions Change: Evidence from the Current Population Survey Health Insurance Redesign," Journal of Official Statistics, Sciendo, vol. 35(1), pages 189-202, March.
    7. Walsh, Brendan & Doorley, Karina, 2022. "Occupations and health," Papers BP2023/3, Economic and Social Research Institute (ESRI).
    8. Tammy Leonard & Amy E. Hughes & Sandi L. Pruitt, 2017. "Understanding How Low–Socioeconomic Status Households Cope with Health Shocks," The ANNALS of the American Academy of Political and Social Science, , vol. 669(1), pages 125-145, January.
    9. David M. Zimmer, 2015. "Employment Effects Of Health Shocks: The Role Of Fringe Benefits," Bulletin of Economic Research, Wiley Blackwell, vol. 67(4), pages 346-358, October.
    10. Bradley, Cathy J. & Neumark, David & Barkowski, Scott, 2013. "Does employer-provided health insurance constrain labor supply adjustments to health shocks? New evidence on women diagnosed with breast cancer," Journal of Health Economics, Elsevier, vol. 32(5), pages 833-849.
    11. Matthew Hill & Nicole Maestas & Kathleen J. Mullen, 2014. "Source of Health Insurance Coverage and Employment Survival Among Newly Disabled Workers Evidence from the Health and Retirement Study," Working Papers WR-1040, RAND Corporation.
    12. Ebaidalla Mahjoub Ebaidalla & Mohammed Elhaj Mustafa Ali, 2018. "Chronic Illness and Labor Market Participation in Arab Countries: Evidence from Egypt and Tunisia," Working Papers 1229, Economic Research Forum, revised 10 Oct 2018.
    13. Datta Gupta, Nabanita & Kleinjans, Kristin J. & Larsen, Mona, 2015. "The effect of a severe health shock on work behavior: Evidence from different health care regimes," Social Science & Medicine, Elsevier, vol. 136, pages 44-51.
    14. Nga Le Thi Quynh & Groot, Wim & Tomini, Sonila M. & Tomini, Florian, 2017. "Effects of health insurance on labour supply: A systematic review," MERIT Working Papers 2017-017, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).

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    More about this item

    Keywords

    Health shocks; Health insurance; Employment; D1; I18; J22;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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