Address correspondence to Neeraj Sood, Ph.D., RAND Health, 1776 Main Street, Santa Monica, CA 90401; e-mail: firstname.lastname@example.org. Arkadipta Ghosh, M.Phil., is with the Pardee RAND Graduate School, Santa Monica, CA. José J. Escarce, M.D., Ph.D., is with the RAND Health and Division of General Internal Medicine and Health Services Research, David Geffen School of Medicine at UCLA, Los Angeles, CA.
Employer-Sponsored Insurance, Health Care Cost Growth, and the Economic Performance of U.S. Industries
Article first published online: 3 JUN 2009
© Health Research and Educational Trust
Health Services Research
Volume 44, Issue 5p1, pages 1449–1464, October 2009
How to Cite
Sood, N., Ghosh, A. and Escarce, J. J. (2009), Employer-Sponsored Insurance, Health Care Cost Growth, and the Economic Performance of U.S. Industries. Health Services Research, 44: 1449–1464. doi: 10.1111/j.1475-6773.2009.00985.x
- Issue published online: 1 SEP 2009
- Article first published online: 3 JUN 2009
- Health care costs;
- employer-sponsored health insurance
Objective. To estimate the effect of growth in health care costs that outpaces gross domestic product (GDP) growth (“excess” growth in health care costs) on employment, gross output, and value added to GDP of U.S. industries.
Study Setting. We analyzed data from 38 U.S. industries for the period 1987–2005. All data are publicly available from various government agencies.
Study Design. We estimated bivariate and multivariate regressions. To develop the regression models, we assumed that rapid growth in health care costs has a larger effect on economic performance for industries where large percentages of workers receive employer-sponsored health insurance (ESI). We used the estimated regression coefficients to simulate economic outcomes under alternative scenarios of health care cost inflation.
Results. Faster growth in health care costs had greater adverse effects on economic outcomes for industries with larger percentages of workers who had ESI. We found that a 10 percent increase in excess growth in health care costs would have resulted in 120,803 fewer jobs, US$28,022 million in lost gross output, and US$14,082 million in lost value added in 2005. These declines represent 0.17 to 0.18 percent of employment, gross output, and value added in 2005.
Conclusion. Excess growth in health care costs is adversely affecting the economic performance of U.S. industries.