Health Insurance Enrollment Decisions: Preferences for Coverage, Worker Sorting, and Insurance Take Up

The weak response by the uninsured to policy initiatives encouraging voluntary enrollment in health insurance has raised concerns regarding the extent to which the uninsured value health insurance. To address this issue, we use data from the 2001 Medical Expenditure Panel Survey to examine the association between health insurance preferences and coverage status. We also consider the role of such preferences in decisions to seek out and enroll in employment-based coverage. We find that adults with weak or uncertain preferences for health insurance are more likely than persons with strong preferences to be uninsured and less likely to acquire coverage. Our econometric work indicates that workers with weak or uncertain preferences are less likely to obtain job offers with insurance, reinforcing prior evidence that workers sort among jobs according to preferences for coverage. We also find that workers with weak or uncertain preferences are less likely to enroll in offered coverage and we estimate the subsidy necessary to compensate such workers for the utility loss were they to enroll. Our results suggest a dual approach to expanding coverage that includes both subsidies and educational efforts to inform targeted groups among the uninsured about the value of health insurance.

Health Insurance Enrollment Decisions: Preferences for Coverage, Worker Sorting, and Insurance Take-up

The weak response by the uninsured to initiatives encouraging voluntary enrollment in health insurance has raised concerns regarding the extent to which the uninsured value insurance. This concern is also relevant for proposals to mandate health insurance coverage since workers will suffer welfare losses if compelled to purchase coverage they perceive to be of little value. To address this issue, we use the 2001 Medical Expenditure Panel Survey to examine decisions by single workers to seek out and enroll in employer-sponsored insurance. We find that single workers with weak or uncertain preferences for health insurance are less likely to have jobs that offer coverage or to enroll in coverage when offered. Our results suggest a dual approach to expanding coverage that includes both subsidies and educational efforts regarding the value of health insurance

Health Insurance Availability at the Workplace: How Important are Worker Preferences?

Analysts have frequently interpreted the uneven distribution of health insurance across firms of varying size as evidence of insurance market failure in the small group market. We explore an additional explanation by considering the relationship between employee preferences for health insurance and its availability at the workplace. We apply a simple model of job choice to data from the 1987 National Medical Expenditure Survey to examine whether workers with weak preferences for health insurance sort themselves into jobs without coverage. Our results for a sample of single workers are consistent with such sorting behavior.