Selection in employer sponsored health insurance

This paper examines the extensive margin of selection into employer-sponsored health insurance (ESHI) using data from the Medical Expenditures Panel Survey 2001–2010 and 2014–2016 and the National Longitudinal Survey of Youth’97 in 2010. Controlling for a large set of firm and job characteristics, I find that before the implementation of the Affordable Care Act (ACA) in 2014, workers aged 25–40 who declined ESHI and remained privately uninsured had significantly higher health risk than those who enrolled. No correlation between health and insurance take-up is found in the 41–64 age group. These results are partly explained by differences in income and Medicaid crowding out ESHI for high risk workers. The paper sheds light on the characteristics of uninsured workers, their incentives for declining insurance and the interaction between private and public health insurance. The allocation of ESHI remained unchanged after the ACA was introduced due to the provisions’ counteracting effects.