Panel Paper:
The Incidence of Healthcare Costs of Health Conditions: Evidence from Older Workers
Saturday, November 5, 2016
:
3:50 PM
Columbia 1 (Washington Hilton)
*Names in bold indicate Presenter
Do workers covered by employer-sponsored insurance bear the costs associated with their health conditions? The nondiscrimination provision of the Health Insurance Portability and Accountability Act (HIPAA) prohibits premiums from varying for similarly situated employees in an employer group based on health-related factors. Keenan et al. (2001) presented supporting evidence that employer-sponsored insurance premium rarely reflects the expected costs of enrollees based on individual-level diagnostic information. However, recent empirical studies suggest that obese workers or smokers bear the incremental healthcare costs associated with their health related conditions or behaviors by accepting lower wages (Bhattacharya and Bundorf 2009 and Cowan and Schwab 2011).
In this paper we extend this direction of inquiry to empirically test whether workers covered by employer-sponsored insurance bear the healthcare costs associated with doctor diagnosed health problems in the form of lower wages. Using a difference-in-difference approach with data from Health and Retirement Survey (HRS), we examined eight different doctor diagnosed health problems including hypertension, diabetes, cancer, lung disease, heart problems, stroke, psychiatric problems, and arthritis. Our findings indicate that workers with the history of certain health problems such as diabetes, lung disease, stroke, and arthritis receive significantly lower wages than healthy workers when they are covered by employer-sponsored insurance. However, we do not see significant wage offsets for workers with chronic hypertension, cancer, or other heart problems. Furthermore, we do not see a similar reduction in wages for workers who suffer the same health conditions but are not covered by employer-sponsored insurance. Our study underscores the heterogeneous wage offsets for some health conditions but not for others when employees are covered by employer-sponsored insurance.
In this paper we extend this direction of inquiry to empirically test whether workers covered by employer-sponsored insurance bear the healthcare costs associated with doctor diagnosed health problems in the form of lower wages. Using a difference-in-difference approach with data from Health and Retirement Survey (HRS), we examined eight different doctor diagnosed health problems including hypertension, diabetes, cancer, lung disease, heart problems, stroke, psychiatric problems, and arthritis. Our findings indicate that workers with the history of certain health problems such as diabetes, lung disease, stroke, and arthritis receive significantly lower wages than healthy workers when they are covered by employer-sponsored insurance. However, we do not see significant wage offsets for workers with chronic hypertension, cancer, or other heart problems. Furthermore, we do not see a similar reduction in wages for workers who suffer the same health conditions but are not covered by employer-sponsored insurance. Our study underscores the heterogeneous wage offsets for some health conditions but not for others when employees are covered by employer-sponsored insurance.
Full Paper:
