The viability of the employer-provided health insurance system

The dissertation evaluate the viability of employer-provided health insurance (EPHI) system in the United States, using two confidential data sets that have been made available to me by the Bureau of Census, including the Medical Expenditure Panel Survey-Insurance Component and Longitudinal Business Database. The empirical findings suggest that the current EPHI system will sustain, at least in a short period. Despite the public accusations that employers are fleeing from the insurance market, I find that dropping health insurance coverage is indeed rare. Employers are also reluctant to replace their insurance plans with HMOs, regardless of its price advantage. Once health insurance is offered, employers still make insurance plans available to most of their workers. However, employers are controlling insurance costs in more subtle ways with some success. They transferred a significant portion of the EPHI costs to their workers through increasing their contribution to the insurance premiums or lowering their wages. Around 20 percent of the increased insurance costs were shifted to workers through employee contribution to health insurance, and at least another 20 percent was transferred through slowing down wage growth after 2001. My findings also suggest the quality for EPHI purchased by employers falls behind the advance of medical service in general. When the quality for EPHI at the market improves by 1 unit, a typical employer will only increase its quality for health insurance around 0.32 units. Finally, the empirical results of this dissertation suggest that offering health insurance is a blessing for the business. Establishments offering EPHI were 29.2 percent more like to survive than others. Furthermore, the gap of default rate between establishments offering health and those not offering did not shrink from 1997 to 2004, despite the increase of health insurance costs.Ph.D.Includes bibliographical references (p. 141-151)