Wage and benefit changes in response to rising health insurance costs
By: Dana Goldman, Neeraj Sood, Arleen Leibowitz.
Contributors: Sood, Neeraj.; Leibowitz, Arleen A.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11063; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11063.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Insurance, Health -- United States -- Costs; Insurance, Health -- Premiums -- United States; Wages -- United States; Employee fringe benefits -- United States
Description: "Many companies have defined-contribution benefit plans requiring employees to pay the full cost (before taxes) of more generous health insurance choices.  Research has shown that employee decisions are quite responsive to these arrangements.  What is less clear is how the total compensation package changes when health insurance premiums rise.  This paper examines employee compensation decisions during a three-year period when health insurance premiums were rising rapidly.  The data come from a single large firm with a flexible benefits plan wherein employees explicitly choose how to allocate compensation between cash wages and other benefits.  Under such an arrangement, higher health insurance premiums must induce changes in the composition of total compensation--either in lower after-tax wages or in decreased contributions to other benefits.  The results suggest that about two-thirds of the premium increase is financed out of cash wages and the remaining one-thirds is financed by a reduction in benefits"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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