Who pays for the medical costs of obesity? New evidence from the employer mandate

Lennon, Conor

doi:10.1002/hec.3818

Cited by 6 publications

(1 citation statement)

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“…More formally, following Bhattacharya and Bundorf () and Lennon (), in a competitive labor market where wages are the only form of compensation, the equilibrium wage of worker i , w i , should equal the value of the worker's marginal product ( MRP i ). If health insurance is mandated as an employment benefit, a competitive labor market would require wages to be modified to account for the new cost of coverage.…”

Section: Background and Literaturementioning

confidence: 99%

Employer‐Sponsored Health Insurance and the Gender Wage Gap: Evidence from the Employer Mandate

Lennon¹

2018

Southern Economic Journal

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In the United States, female workers tend to have higher medical expenditures than male workers. Due to experience rated premiums, the cost of providing employer-sponsored health insurance (ESI) therefore differs by gender. This article examines if that cost difference contributes to the gender wage gap. Identification comes from the exogenous variation provided by the Affordable Care Act's employer mandate. Estimation uses a difference-in-difference framework with data from the Medical Expenditure Panel Survey. Findings suggest the portion of the gender wage gap attributable to ESI is smaller than existing estimates in the literature and is statistically no different to zero once individual medical expenses are included as a control. In addition, the article's empirical approach highlights that existing work on the role of ESI in the gender wage gap does not separately identify the effect of ESI from plausible alternatives.JEL Classification: I13, J16, J23, J31, J32, J71 The full cost of ESI is pushed onto firms either via experience rating (premiums reflect the actual expenditures of employees) or self-insurance. 2 The Health Insurance Portability and Accountability Act (HIPAA) forbids discriminatory distinctions in benefit generosity and employee contributions. See https://www.shrm.org/resourcesandtools/tools-and-samples/hr-qa/pages/offeringdifferentbenefitsfor differentemployees.aspx. Given these medical expenditure differences, employers who offer ESI should prefer (at the margin) to hire males unless female wages are free to adjust to account for the cost of ESI. 3 However, Daneshvary and Clauretie (2007), using spousal job characteristics as an instrumental variable, find little evidence to suggest that females receive lower wages than males due to ESI. Cowan and Schwab (2016) reach the opposite conclusion. They use a difference-in-difference empirical strategy that compares wage gaps between males and females at firms that do and do not offer ESI. Their strategy is borrowed from Bhattacharya and Bundorf (2009), who examine how ESI affects obese workers' wages. Cowan and Schwab's findings suggest that hourly wages are $0.50 to $1.50 (in 2002 dollars) larger for males when ESI is offered. Even though firms that do and do not offer ESI are surely different, these estimates have a causal interpretation if the identifying assumptionthat unobserved effects on wages are the same for males and females-is valid.This article first establishes that Cowan and Schwab's (and, in turn, Bhattacharya and Bundorf's) identifying assumption does not hold. To do so, the article subjects their identification strategy to a series of falsification tests using wage and medical expenditure differences among other groups. This exercise highlights that there are differences between firms that do and do not offer ESI that will tend to increase wage gaps between workers-for reasons that are unrelated to ESI. These identification issues ensure that the effect of ESI on the gender wage gap remains an open question.To resolve that open ...

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Section: Background and Literaturementioning

confidence: 99%

Employer‐Sponsored Health Insurance and the Gender Wage Gap: Evidence from the Employer Mandate

Lennon¹

2018

Southern Economic Journal

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Did the affordable care act increase the availability of employer‐sponsored health insurance?

Lennon

2021

Southern Economic Journal

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The 2010 Affordable Care Act (ACA) included two provisions, the Employer Shared Responsibility Provision (the “employer mandate”) and the Small Business Health Options Program (“SHOP”), aimed at increasing the availability of employer‐sponsored health insurance (ESI) among workers at small firms. To examine whether these provisions led to greater ESI availability, I use 2011–2017 Medical Expenditure Panel Survey (MEPS) data in a difference‐in‐difference framework that compares changes in ESI availability among workers at small and large firms before and after the ACA's provisions come into effect. My estimates show that there is a 3.5 percentage point increase in ESI availability among workers at smaller firms after 2013. When focusing on workers most likely to be affected by the employer mandate, I find a larger 5.2 percentage point increase in ESI availability, amounting to a 39% decline in the proportion who do not have ESI available. However, I find no evidence that greater ESI availability led to increases in ESI coverage rates. Instead, descriptive estimates suggest that gains in health insurance coverage after 2013 consist of significant increases in the number of working adults who report having Medicaid coverage, including among workers who are offered ESI. I use MEPS data for my analysis because, along with employment, firm size, and health insurance details, MEPS also provides health status and healthcare access/utilization information. Looking at changes in these health measures, I find only limited evidence to suggest that the ACA's provisions improved access to care or measures of health status for workers.

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The incidence of the healthcare costs of chronic conditions

Lee

Jeung

2021

Int J Health Econ Manag.

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Who pays for the medical costs of obesity? New evidence from the employer mandate

Cited by 6 publications

References 35 publications

Employer‐Sponsored Health Insurance and the Gender Wage Gap: Evidence from the Employer Mandate

Employer‐Sponsored Health Insurance and the Gender Wage Gap: Evidence from the Employer Mandate

Did the affordable care act increase the availability of employer‐sponsored health insurance?

The incidence of the healthcare costs of chronic conditions

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