How does the price of health insurance affect the probability that a firm will offer health insurance to their workers? A previous post provides a variety of estimates of the elasticity of firm health insurance offering with respect to premiums. A more recent article by Gruber and Lettau (2004) needs to be added to this mix.
This paper uses data from the 1983-1995 National Compensation Surveys to determine that “there is a moderately sized elasticity of insurance offering with respect to after-tax prices (-0.25), and a larger elasticity of insurance spending (-0.7). We also find that the elasticities are driven primarily by small firms, for whom the elasticity is larger.” Additionally, the authors claim that if the tax subsidy to employer-provided health insurance were eliminated, 15 million fewer workers would be offered health insurance.
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