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E M P L O Y E E B E N E F I T S , C O M P E N S A T I O N
& P E N S I O N L A W
Vol. 4, No. 6: March 27, 2003
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Publisher: LSN Employment, Labor, Compensation & Pension Journals
a division of
Social Science Electronic Publishing, Inc. (SSEP)
and Social Science Research Network (SSRN)
Editor: PAMELA PERUN
Urban Institute
Mailto:pamela@planetnow.com
Copyright: SSEP, Inc. 2003. All rights reserved.
Leading Social Science Research Delivered To Your Desktop
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Topic of This Issue:
Costs of Health Benefits
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T A B L E of C O N T E N T S
_________________________________________________________________
NEW and FORTHCOMING ARTICLES
"Retiree Health Benefits: Savings Needed to Fund Health Care in
Retirement"
EBRI Issue Brief, No. 254, February 2003
PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
DALLAS L. SALISBURY
Employee Benefit Research Institute (EBRI)
"Inside the Sausage Factory: Improving Estimates of the Effects
of Health Insurance Expansion Proposals"
The Milbank Quarterly, Vol. 80, pp. 603-635, 2002
SHERRY A. GLIED
Columbia University
School of Public Health
National Bureau of Economic Research (NBER)
DAHLIA REMLER
Columbia University
School of Public Health
Tulane University
JOSHUA GRAFF ZIVIN
Columbia University
"Small Employers and Health Benefits: Findings from the 2002
Small Employer Health Benefits Survey"
EBRI Issue Brief, No. 253, January 2003
PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
RUTH HELMAN
Mathew Greenwald & Associates
WORKING PAPERS
"Medicare, Retirement Costs, and Labor Supply at Older Ages"
RICHARD W. JOHNSON
Urban Institute
"Exploring the Health-Wealth Nexus"
JONATHAN MEER
Stanford University
Department of Economics
DOUGLAS L. MILLER
University of California, Davis
Department of Economics
HARVEY S. ROSEN
Princeton University
Department of Economics
CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)
National Bureau of Economic Research (NBER)
"Subsidies to Employee Health Insurance Premiums and the Health
Insurance Market"
JONATHAN GRUBER
Massachusetts Institute of Technology (MIT)
Department of Economics
National Bureau of Economic Research (NBER)
EBONYA L. WASHINGTON
Massachusetts Institute of Technology (MIT)
Department of Economics
"The Reallocation of Compensation in Response to Health Insurance
Premium Increases"
DANA P. GOLDMAN
RAND
National Bureau of Economic Research (NBER)
ARLEEN LEIBOWITZ
University of California, Los Angeles
School of Public Policy & Social Research
National Bureau of Economic Research (NBER)
NEERAJ SOOD
RAND
S S R N I N F O R M A T I O N
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N E W and F O R T H C O M I N G Articles
_________________________________________________________________
"Retiree Health Benefits: Savings Needed to Fund Health Care in
Retirement"
EBRI Issue Brief, No. 254, February 2003
BY: PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
DALLAS L. SALISBURY
Employee Benefit Research Institute (EBRI)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=385240
Other Electronic Document Delivery:
http://www.ebri.org
SSRN only offers technical support for papers
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Contact: PAUL FRONSTIN
Email: Mailto:fronstin@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Phone: 202-775-6352
Fax: 202-775-6312
Co-Auth: DALLAS L. SALISBURY
Email: Mailto:salisbury@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Paper Requests:
Contact Alicia Willis at Mailto:publications@ebri.org, or 2121 K
St., NW, Suite 600, Washington, DC 20037-1896.
Phone:(202)572-7422, Fax:(202)775-6312. Full-Text downloads are
available from SSRN Online for $7.50.
ABSTRACT:
This Issue Brief presents estimates of how much money a person
will need to save to completely pay for health insurance and
out-of-pocket health care costs during retirement. The
combination of the erosion of employment-based retiree health
benefits and limited benefits from Medicare and Medigap means
that retirees should expect to pay a significant amount of money
for health insurance and health care services during retirement.
Various illustrations of needed savings are presented in this
report, based on a number of assumptions regarding insurance
premium levels and how they might change over time, the source
of coverage, rates of return on investment, age at retirement,
and life expectancy.
Keywords: Employment-based Benefits, Health Care Costs, Health
Insurance, Life Expectancy, Retiree Health Benefits, Savings
JEL Classification: I11, J1, J33
______________________________
"Inside the Sausage Factory: Improving Estimates of the Effects
of Health Insurance Expansion Proposals"
The Milbank Quarterly, Vol. 80, pp. 603-635, 2002
BY: SHERRY A. GLIED
Columbia University
School of Public Health
National Bureau of Economic Research (NBER)
DAHLIA REMLER
Columbia University
School of Public Health
Tulane University
JOSHUA GRAFF ZIVIN
Columbia University
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=370528
Contact: SHERRY A. GLIED
Email: Mailto:sag1@columbia.edu
Postal: Columbia University
School of Public Health
Division of Health Policy and Management
600 West 168th St., 6th Floor
New York, NY 10032 UNITED STATES
Fax: 212-305-3405
Co-Auth: DAHLIA REMLER
Email: Mailto:dr404@columbia.edu
Postal: Columbia University
School of Public Health
Division of Health Policy and Management
600 West 168th St., 6th Floor
New York, NY 10032 UNITED STATES
Co-Auth: JOSHUA GRAFF ZIVIN
Email: Mailto:author339440@ssrn.com
Postal: Columbia University
3022 Broadway
New York, NY 10027 UNITED STATES
ABSTRACT:
The fate of a proposal to expand health insurance is influenced
by predictions of the proposal's effects on the number of newly
insured and the cost of new coverage. Estimates vary widely, for
reasons that are often hard to discern and evaluate. This
article describes and compares the frameworks and parameters
used for insurance modeling. It examines conventions and
controversies surrounding a series of modeling parameters: how
individuals respond to a change in the price of coverage, the
extent of participation in a new plan by those already privately
insured, firms' behavior, and the value of public versus private
coverage. The article also suggests ways of making models more
transparent and proposes "reference case" guidelines for
modelers so that consumers can compare modeling results.
______________________________
"Small Employers and Health Benefits: Findings from the 2002
Small Employer Health Benefits Survey"
EBRI Issue Brief, No. 253, January 2003
BY: PAUL FRONSTIN
Employee Benefit Research Institute (EBRI)
RUTH HELMAN
Mathew Greenwald & Associates
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=374021
Other Electronic Document Delivery:
http://www.ebri.org
SSRN only offers technical support for papers
downloaded from the SSRN Electronic Paper Collection
location. When URLs wrap, you must copy and paste
them into your browser eliminating all spaces.
Contact: PAUL FRONSTIN
Email: Mailto:fronstin@ebri.org
Postal: Employee Benefit Research Institute (EBRI)
Suite 600
2121 K Street, NW
Washington, DC 20037-1896 UNITED STATES
Phone: 202-775-6352
Fax: 202-775-6312
Co-Auth: RUTH HELMAN
Email: Mailto:RUTHHELMAN@GREENWALDRESEARCH.COM
Postal: Mathew Greenwald & Associates
4201 Connecticut Ave., NW
Suite 620
Washington, DC USA 20008
Paper Requests:
Contact Alicia Willis at Mailto:publications@ebri.org, or 2121 K
St., NW, Suite 600, Washington, DC 20037-1896.
Phone:(202)572-7422, Fax:(202)775-6312. Full-Text downloads are
available from SSRN Online for $7.50.
ABSTRACT:
This paper presents findings from the 2002 Small Employer Health
Benefits Survey (SEHBS). It also presents a comparison of the
2002 survey to data collected from the 2000 SEHBS. The survey
examines a number of issues related to small employers and their
decision to offer health benefits to workers. The goal of the
survey was to gather information to better understand how to get
small employers to offer health benefits. Understanding the
health coverage decisions of small-business owners is of
critical importance in efforts to expand health insurance
coverage in the current health insurance system and reduce the
growing number of uninsured Americans.
Keywords: Employee Benefit Surveys, Employment-based Benefits,
Health Insurance Attitudes and Opinions, Health Insurance
Coverage, Small Business, Tax Expenditures
JEL Classification: I11, J32
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W O R K I N G P A P E R Abstracts
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"Medicare, Retirement Costs, and Labor Supply at Older Ages"
BY: RICHARD W. JOHNSON
Urban Institute
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=358641
Other Electronic Document Delivery:
http://www.bc.edu/crr/paper/wp_2002-08.pdf
SSRN only offers technical support for papers
downloaded from the SSRN Electronic Paper Collection
location. When URLs wrap, you must copy and paste
them into your browser eliminating all spaces.
Paper ID: Center for Retirement Research Working Paper No.
2002-08
Date: December 2002
Contact: RICHARD W. JOHNSON
Email: Mailto:Rjohnson@ui.urban.org
Postal: Urban Institute
2100 M Street, NW
Washington, DC 20037 UNITED STATES
Phone: 202-261-5541
Fax: 202-833-4388
Paper Requests:
Contact Amy Chasse, Communications Specialist, Center for
Retirement Research, Boston College, Fulton Hall 550, Chestnut
Hill, MA 02467-3808. Phone: (617)552-6783. Fax: (617)552-1750.
Mailto:chassea@bc.edu
ABSTRACT:
When workers retire, they forego the wages and many of the
benefits they received while employed. By providing subsidized
health insurance coverage to virtually every American at age 65,
Medicare reduces the cost of retiring for workers who receive
health benefits from their employers, especially when those
benefits do not continue after retirement. As a result, an
increase in the age of Medicare eligibility may lead many
workers to delay retirement. This paper examines how a potential
increase in the age of Medicare eligibility might affect
retirement behavior by relating the health insurance costs of
retirement to labor supply decisions. The insurance cost of
retirement is the increase in health insurance premiums that
workers face after they retire, relative to what they pay when
working. We measure the effect of insurance costs on labor force
withdrawals by including the net present value of premium costs
in a multivariate model of retirement. We then simulate the
impact of changes in the Medicare eligibility age by
re-computing premium costs under the assumption that individuals
could not receive Medicare coverage until age 67. We find that
health insurance costs significantly discourage retirement, and
that an increase in the age of Medicare eligibility would reduce
retirement rates.
JEL Classification: J14, J21, J26
______________________________
"Exploring the Health-Wealth Nexus"
BY: JONATHAN MEER
Stanford University
Department of Economics
DOUGLAS L. MILLER
University of California, Davis
Department of Economics
HARVEY S. ROSEN
Princeton University
Department of Economics
CESifo (Center for Economic Studies and Ifo
Institute for Economic Research)
National Bureau of Economic Research (NBER)
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=386183
Paper ID: NBER Working Paper No. W9554
Date: March 2003
Contact: HARVEY S. ROSEN
Email: Mailto:hsr@princeton.edu
Postal: Princeton University
Department of Economics
001 Fisher Hall
Princeton, NJ 08544 UNITED STATES
Co-Auth: JONATHAN MEER
Email: Mailto:jmeer@stanford.edu
Postal: Stanford University
Department of Economics
Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072 UNITED STATES
Co-Auth: DOUGLAS L. MILLER
Email: not available
Postal: University of California, Davis
Department of Economics
One Shields Drive
Davis, CA 95616-8578 UNITED STATES
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
The casual links between health and economic resources have long
concerned social scientists. We use four waves of data from the
Panel Study of Income Dynamics to analyze the impact of wealth
upon an individual's health status. The difficulty in
approaching this task that has bedeviled previous studies is
that wealth may be endogenous; a priori, it is just as likely
that changes in health affect wealth as vice versa. We argue
that inheritance is a suitable instrument for the change in
wealth, and implement a straightforward instrumental variables
strategy to deal with this problem. Our results suggest that the
causal relationship running from wealth to health may not be as
strong as first appears. In the data, wealth exerts a positive
and statistically significant effect on health status, but it is
very small in magnitude. Instrumental variables estimation
leaves the point estimate approximately the same, but renders it
insignificantly different from zero. And even when the point
estimate is increased by twice its standard error, the
quantitative effect is small. We conclude that the wealth-health
connection is not driven by short run changes in wealth.
JEL Classification: I12
______________________________
"Subsidies to Employee Health Insurance Premiums and the Health
Insurance Market"
BY: JONATHAN GRUBER
Massachusetts Institute of Technology (MIT)
Department of Economics
National Bureau of Economic Research (NBER)
EBONYA L. WASHINGTON
Massachusetts Institute of Technology (MIT)
Department of Economics
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=387574
Paper ID: NBER Working Paper No. W9567
Date: March 2003
Contact: JONATHAN GRUBER
Email: Mailto:gruberj@mit.edu
Postal: Massachusetts Institute of Technology (MIT)
Department of Economics
Room E52-355
50 Memorial Drive
Cambridge, MA 02142 UNITED STATES
Phone: 617-253-8892
Fax: 617-253-1330
Co-Auth: EBONYA L. WASHINGTON
Email: Mailto:ebonya@mit.edu
Postal: Massachusetts Institute of Technology (MIT)
Department of Economics
50 Memorial Drive
Cambridge, MA 02142 UNITED STATES
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
One approach to covering the uninsured that is frequently
advocated by policy makers is subsidizing the employee portion
of employer-provided health insurance premiums. But, since the
vast majority of those offered employer-provided health
insurance already take it up, such an approach is only appealing
if there is a very high takeup elasticity among those who are
offered and uninsured. Moreover, if plan choice decisions are
price elastic, then such subsidies can at the same time increase
health care costs by inducing selection of more expensive plans.
We study an excellent example of such subsidies: The
introduction of pre-tax premiums for postal employees in 1994,
and then for the remaining federal employees in 2000. We do so
using a census of personnel records for all federal employees
from 1991 through 2002. We find that there is a very small
elasticity of insurance takeup with respect to its after-tax
price, and a modest elasticity of plan choice. Our results
suggest that the federal government did little to improve
insurance coverage, but much to increase health care
expenditures, through this policy change.
JEL Classification: I1, H2
______________________________
"The Reallocation of Compensation in Response to Health Insurance
Premium Increases"
BY: DANA P. GOLDMAN
RAND
National Bureau of Economic Research (NBER)
ARLEEN LEIBOWITZ
University of California, Los Angeles
School of Public Policy & Social Research
National Bureau of Economic Research (NBER)
NEERAJ SOOD
RAND
Document: Available from the SSRN Electronic Paper Collection:
http://papers.ssrn.com/paper.taf?abstract_id=386169
Paper ID: NBER Working Paper No. W9540
Date: March 2003
Contact: DANA P. GOLDMAN
Email: Mailto:Dana_Goldman@rand.org
Postal: RAND
1700 Main Street
P.O. Box 2138
1700 Main Street
Santa Monica, CA 90407-2138 UNITED STATES
Co-Auth: ARLEEN LEIBOWITZ
Email: Mailto:ARLEEN@UCLA.EDU
Postal: University of California, Los Angeles
School of Public Policy & Social Research
Los Angeles, CA 90095 UNITED STATES
Co-Auth: NEERAJ SOOD
Email: Mailto:sood@rand.edu
Postal: RAND
P.O. Box 2138
1700 Main Street
Santa Monica, CA 90407-2138 UNITED STATES
Paper Requests:
Full-Text downloads are available from SSRN Online for $5.
ABSTRACT:
This paper examines how compensation packages change when health
insurance premiums rise. We use data on employee choices within
a single large firm with a flexible benefits plan; an
increasingly common arrangement among medium and large firms. In
these companies, employees explicitly choose how to allocate
compensation between cash and various benefits such as
retirement, medical insurance, life insurance, and dental
benefits. We find that a $1 increase in the price of health
insurance leads to 52-cent increase in expenditures on health
insurance. Approximately 2/3 of this increase is financed
through reduced wages and 1/3 through other benefits.