Employer Health Insurance Offerings and Employee Enrollment Decisions


  • Daniel Polsky,

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    • Address correspondence to Daniel Polsky, Ph.D., Research Associate Professor, Division of General Internal Medicine, University of Pennsylvania, 423 Guardian Drive, Philadelphia, PA 19104. Daniel Polsky, Ph.D., Senior Fellow, and Rebecca Stein, Ph.D., Senior Fellow, are with the Leonard Davis Institute of Health Economics, Philadelphia. Rebecca Stein, Director of Microeconomics Principles Program, is also with the Economics Department, University of Pennsylvania, Philadelphia. Sean Nicholson, Ph.D., Assistant Professor, is with the Department of Policy Analysis and Management, Cornell University, Ithaca, NY. Sean Nicholson, Ph.D., and M. Kate Bundorf, Ph.D., M.B.A., are also with NBER. Dr. Bundorf is also Assistant Professor of Health Research and Policy, at Stanford University School of Medicine, Standford, CA.

  • Rebecca Stein,

  • Sean Nicholson,

  • M. Kate Bundorf


Objective. To determine how the characteristics of the health benefits offered by employers affect worker insurance coverage decisions.

Data Sources. The 1996–1997 and the 1998–1999 rounds of the nationally representative Community Tracking Study Household Survey.

Study Design. We use multinomial logistic regression to analyze the choice between own-employer coverage, alternative source coverage, and no coverage among employees offered health insurance by their employer. The key explanatory variables are the types of health plans offered and the net premium offered. The models include controls for personal, health plan, and job characteristics.

Principal Findings. When an employer offers only a health maintenance organization married employees are more likely to decline coverage from their employer and take-up another offer (odds ratio (OR)=1.27, p<.001), while singles are more likely to accept the coverage offered by their employer and less likely to be uninsured (OR=0.650, p<.001). Higher net premiums increase the odds of declining the coverage offered by an employer and remaining uninsured for both married (OR=1.023, p<.01) and single (OR=1.035, p<.001) workers.

Conclusions. The type of health plan coverage an employer offers affects whether its employees take-up insurance, but has a smaller effect on overall coverage rates for workers and their families because of the availability of alternative sources of coverage. Relative to offering only a non-HMO plan, employers offering only an HMO may reduce take-up among those with alternative sources of coverage, but increase take-up among those who would otherwise go uninsured. By modeling the possibility of take-up through the health insurance offers from the employer of the spouse, the decline in coverage rates from higher net premiums is less than previous estimates.