Kosali Ilayperuma Simon

Crowd-out 10 years later: Have recent public insurance expansions crowded out private health insurance?

Ten years ago, Cutler and Gruber [Cutler, D., Gruber, J., 1996. Does public health insurance crowdout private insurance? Quarterly Journal of Economics 111, 391-430] suggested that crowd-out might be quite large, but much subsequent research has questioned this conclusion. Our results using improved data and methods clearly show that crowd-out is still significant in the 1996-2002 period. This finding emerges most strongly when we consider family level measures of public insurance eligibility. We also find that recent anti-crowd-out provisions in public expansions may have had the opposite effect, lowering take-up by the uninsured faster than they lower crowd-out of private insurance.

THE IMPACT OF INCOME ON THE WEIGHT OF ELDERLY AMERICANS

This paper estimates the impact of income on the body weight and clinical weight classification of elderly Americans using a natural experiment that led otherwise identical retirees to receive significantly different Social Security payments based on their year of birth. We estimate models of instrumental variables using data from the National Health Interview Surveys and find no significant effect of income on weight. The confidence intervals rule out even moderate effects of income on weight and on the probability of being underweight or obese, especially for men. For example, they indicate that the income elasticity of body mass index is not greater in absolute value than 0.06 for men or 0.14 for women.

Labor Market Consequences of State Health Insurance Regulation

This study, based mainly on the 1989–98 March Current Population surveys, finds that state-mandated health insurance benefits and small-group health insurance reform had no statistically significant effects on labor market outcomes such as the quantity of work, wages, and whether an employee worked for a small or large firm. The number and type of state-mandated health insurance benefits were unrelated to weeks of work, wages, and the prevalence of private insurance coverage, but positively associated with weekly work hours. Extensive small-group health insurance reform was associated with a slight decline in the prevalence of private insurance coverage in small firms, and this reform affected both full- and part-time employees. Less extensive reforms were not generally related to the prevalence of private insurance coverage. Overall, the authors do not find strong evidence that insurance regulations affected labor market outcomes, although they appear to cause a small decrease in private coverage.

Do Minimum Wages Affect Non-Wage Job Attributes? Evidence on Fringe Benefits

Although many studies have tested neoclassical labor market theorys prediction that employers will react to binding minimum wages by reducing employment levels, much less empirical research has explored the possibility that employers also respond to minimum wages by adjusting non-wage components of the job, such as fringe benefits, job safety, and access to training. Using Current Population Survey data for 1979–2000, this study investigates the effect of minimum wage legislation on the provision of employer health insurance and employer pension coverage. The authors examine effects of state and federal variation in minimum wages on groups likely to be affected by the minimum wage, and compare these effects to estimates found for groups unlikely to be affected. Whether the analysis uses only state-level variation or federal and state variation in minimum wages, the results indicate no discernible effect of the minimum wage on fringe benefit generosity for low-skill workers.

Displaced Workers and Employer-Provided Health Insurance: Evidence of a Wage/Fringe Benefit Tradeoff?

Job changes that result from plant closings and mass layoffs provide an opportunity to see how workers respond to an employment shock that is arguably exogenous to individual productivity. Comparing compensation packages of displaced workers on their old and new jobs is a potentially promising method to infer a tradeoff between wages and non-wage benefits. Although displaced worker data overcomes many of the pitfalls to estimating wage/fringe tradeoffs by controlling for time-invariant unobserved productivity, time-varying unobservables could still bias estimates. In this analysis, I investigate the compensating wage differential for one particularly valuable benefit, employer-provided health insurance. I find that even after controlling for an extensive set of productivity factors, I obtain results indicating a wrong-signed tradeoff. Those who lose health insurance through the job change also lose wages relative to other displaced workers, while those who gain health insurance also gain in wages. Individuals expected to incur higher health care costs (older workers and workers who are likely to buy family coverage) do not experience steeper wage/health insurance tradeoffs as would be expected if employers were able to pass health care costs on to workers according to individual costs. Although this exercise fails to isolate a wage/fringe tradeoff, the strong correlation between changes in wages and changes in fringe benefits has important implications for public policy towards displaced workers. Further research is needed to understand the true magnitude and distribution of the costs of job displacement taking changes in fringe benefits into account.

Patient education and the impact of new medical research

We examine the impact that medical research published in peer-reviewed journals has on the practice of medicine. We exploit the release of a recent New England Journal of Medicine article which demonstrated that the risks of attempting a vaginal birth after having a previous C-section birth (VBAC) were higher than previously thought. We find that immediately following this article, the national VBAC rate dropped by 16% and this change was largest among more educated mothers, particularly those with a graduate degree.

The Effect of Medicaid Expansions in the Late 1980s and Early 1990s on the Labor Supply of Pregnant Women

A substantial body of research has found that expansions in Medicaid eligibility increased enrollment in Medicaid, reduced the rate of uninsured, and reduced the rate of private health insurance coverage (i.e., crowd-out). Notably, no published research has examined the labor supply mechanism by which crowd-out could occur. This study examines the effects of expansions in Medicaid eligibility for pregnant women in the late 1980s and the early 1990s on labor supply, which is one of the possible mechanisms underlying crowd-out. Estimates suggest that the 20 percentage point increase in Medicaid eligibility during the sample period was associated with an 11–13 percent decrease in the probability that a woman who gave birth in the past year was employed. Among unmarried women with less than a high school education, the change in Medicaid eligibility reduced employment by approximately 13 percent to 16 percent. We find that most of this reduction in labor supply was associated with crowd-out (i.e., movement from private to public insurance concurrent with the shift in labor supply).

Prenatal Health Investment Decisions: Does the Child's Sex Matter?

Individuals invest in their own health, but children rely on parents to act on their behalf, especially in the case of prenatal health. In this article, we ask, Do parents in the United States who choose to give birth allocate resources differently in the prenatal health of their sons and daughters when the sex of the child is known in advance? We pay special attention to prenatal health behaviors, which can be viewed as investment decisions, of first-generation immigrant parents from India and China, two countries with demonstrated son preference. Ultrasound receipt proxies for knowing fetal gender, enabling us to separate child sex-related biological differences from investment differences in sons’ and daughters’ health. There is evidence consistent with sex-selective abortions among Indian and Chinese populations, but among parents who choose to carry the pregnancy to term, our findings do not suggest that knowledge of child sex drives prenatal health investments in the United States, neither in the population as a whole nor among Indian and Chinese immigrants.

Older adults place lower value on choice relative to young adults

Choice is highly valued in modern society, from the supermarket to the hospital; however, it remains unknown whether older and younger adults place the same value on increased choice. The current investigation tested whether 53 older (M age = 75.44 years) versus 53 younger adults (M age = 19.58 years) placed lower value on increased choice by examining the monetary amounts they were willing to pay for increased prescription drug coverage options--important given the recently implemented Medicare prescription drug program. Results indicate that older adults placed lower value on increasing choice sets relative to younger adults, who placed progressively higher value on increasingly larger choice sets. These results are discussed regarding their implications for theory and policy.

The Effect of SCHIP Expansions on Health Insurance Decisions by Employers

This study uses repeated cross-sectional data from the Medical Expenditure Panel Survey—Insurance Component (MEPS-IC), a large nationally representative survey of establishments, to investigate the effect of the State Childrens Health Insurance Program (SCHIP) on health insurance decisions by employers. The data span the years 1997 to 2001, the period when states were implementing SCHIP. We exploit cross-state variation in the timing of SCHIP implementation and the extent to which the program increased eligibility for public insurance. We find evidence suggesting that employers whose workers were likely to have been affected by these expansions reacted by raising employee contributions for family coverage options, and that take-up of any coverage, generally, and family coverage, specifically, dropped in these establishments. We find no evidence that employers stopped offering single or family coverage outright.