The impact of minimum wage increases on the provision of employer sponsored insurance
Download
1 / 19

The Impact of Minimum Wage Increases on the Provision of Employer-Sponsored Insurance - PowerPoint PPT Presentation


  • 94 Views
  • Uploaded on

The Impact of Minimum Wage Increases on the Provision of Employer-Sponsored Insurance. Jessica Vistnes (co-author: Kosali Simon, Indiana University). Background. Large changes in federal and state minimum wages from 2000-2008 Most studies of minimum wages have focused on employment effects

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'The Impact of Minimum Wage Increases on the Provision of Employer-Sponsored Insurance' - livana


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
The impact of minimum wage increases on the provision of employer sponsored insurance

The Impact of Minimum Wage Increases on the Provision of Employer-Sponsored Insurance

Jessica Vistnes

(co-author: Kosali Simon, Indiana University)


Background
Background Employer-Sponsored Insurance

  • Large changes in federal and state minimum wages from 2000-2008

  • Most studies of minimum wages have focused on employment effects

    • However, it is also important to understand how fringe benefits react

      • Particularly if unintended consequences

  • There is a small literature on the effect of minimum wages on health insurance

    • All studies use data from Current Population Survey

    • Therefore, no data on workforce characteristics

      • Important information because of group nature of employers’ health insurance decisions


Minimum wage activity 2000 2008
Minimum Wage Activity Employer-Sponsored Insurance2000-2008

  • Federal minimum wage changes

    • 2007 to 2009 in steps from $5.15-$7.25

    • First change in federal minimum wage in a decade (Fair Minimum Wage Act 2007)

  • State activity high 2000-2008

    • 129 instances of states changing minimum wages over this time period

      • Average change : 51.6 cents

      • Range: 10 cents to $1.80


Offer rates
Offer Rates Employer-Sponsored Insurance


Offers of dependent coverage
Offers of Dependent Coverage Employer-Sponsored Insurance


Prior literature on minimum wages and health insurance
Prior Literature on Minimum Wages and Health Insurance Employer-Sponsored Insurance

  • Royalty (2000, working paper)

  • Simon and Kaestner (2004)

  • Marks (2011)


The impact of minimum wage increases on the provision of employer sponsored insurance
Data Employer-Sponsored Insurance

  • 2000-2008 MEPS-Insurance Component, private sector establishments

    • 235,000 establishments, 230,000 plans

  • Advantages:

    • Many dependent variables

    • Contains wage distribution within the establishment

      • % of workers with low wage, middle and high-wages

        • Cutoff in 2008 is < $11, $11-25.50, >$25.50

  • Disadvantage

    • Limited ability to examine whether plans differ by wage level


Dependent variables
Dependent Variables Employer-Sponsored Insurance

  • Establishment-level outcomes:

    • Establishment offers health insurance

    • Eligibility rate, subset to establishments who offer

    • Offers family coverage

    • Offers any dependent coverage (either employee-plus-one or family coverage)


Dependent variables continued
Dependent Variables (continued) Employer-Sponsored Insurance

  • Plan-level outcomes:

    • Annual total employee contributions for single and family coverage (in dollars and in shares of total premiums) ,

    • Single deductible levels

    • Actuarial value

    • Single premium /Actuarial value

    • Plan is an HMO

    • Plan is a PPO


Other explanatory variables
Other Explanatory Variables Employer-Sponsored Insurance

  • Firm size

  • Industry

  • Age of business

  • Ownership type

  • Non-profit status

  • Whether the establishment is located in an MSA

  • The proportion female, age 50 and older, union members

  • State fixed effects, Year fixed effects

  • County unemployment rate


Hypothesis and method
Hypothesis and Method Employer-Sponsored Insurance

  • Minimum wage effects will be larger at establishments with a higher concentration of low-wage workers

  • We test our hypothesis by:

    • Comparing establishments with different levels of low-wage workers to those with no low-wage workers (Difference-in-Difference)

    • Identification comes from state increases above federal minimum wage levels


Wage categories
Wage Categories Employer-Sponsored Insurance

  • Wage categories defined as:

    • ALL_LOW (100% of workers are low-wage)

    • MOSTLY_LOW (>=50% of workers are low-wage)

    • SOME_LOW (>0 and <50% of workers)

    • NO_LOW (no workers are low-wage)


Model
Model Employer-Sponsored Insurance

Yi= α +

β1 * Xi,st +

β2 * ALL_LOWi,st +

β3 * MOSTLY_LOWi,st+

β4 * SOME_LOWi,st +

β5 * MINWAGEi,st+

Γ1 * ALL_LOWi,st * MINWAGEst+

Γ2 * MOSTLY_LOWi,st * MINWAGEst+

Γ3 * SOME_LOWi,st* MINWAGEst +εi



Selected ols results for plan level outcomes
Selected OLS Results for Plan-Level Outcomes Employer-Sponsored Insurance


Selected ols results for plan level outcomes continued
Selected OLS Results for Plan Level Outcomes Employer-Sponsored Insurance (continued)


Sensitivity checks
Sensitivity checks Employer-Sponsored Insurance

  • Does Medicaid/CHIP policy confound results?

    • Our results generally unchanged by inclusion of Medicaid/CHIP simulated eligibility variable


Conclusions
Conclusions Employer-Sponsored Insurance

  • Minimum wage increases led to:

    • Decreases in offer rates among entirely and majority low-wage employers

  • Among those who offered:

    • Reductions in offers of family coverage and any dependent coverage

      • For entirely low-wage employers

    • No change in eligibility rates

    • No change or inconsistent change for plan level outcomes


Next steps
Next Steps Employer-Sponsored Insurance

  • New outcomes

    • Other fringe benefits

    • Take-up rate (corresponds to CPS question)

    • Whether employee premium contributions are positive or zero

  • Alternative ways to measure minimum wage

    • % increase rather than absolute increase

    • % of the real median wage in the state, from the CPS

    • Within specific industries