Accounting for the Slowdown in Employer Health Care Costs

30 Pages Posted: 10 Jul 2000 Last revised: 4 Oct 2010

See all articles by Alan B. Krueger

Alan B. Krueger

Princeton University - Industrial Relations Section; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Helen Levy

University of Chicago - Harris Public Policy; National Bureau of Economic Research (NBER)

Date Written: January 1997

Abstract

The most widely used measure of employer health care costs, the health insurance component of the Employment Cost Index, indicates that cost growth has decelerated since 1989. In recent years employer expenditures per hour worked have even declined in nominal dollars. This paper analyzes the components of changes in employers' health care costs over the 1992-94 and 1987-93 periods. We find that employer costs have decreased primarily as a result of a steady decrease in the fraction of workers with coverage and a large decrease in the rate of growth of insurance premiums. We conclude that the shift to managed care does not appear to be directly responsible for significant cost savings because managed care premiums are almost as high as those for fee-for-service plans, on average. Finally, we note that there is a significant need for improved data collection in this area.

Suggested Citation

Krueger, Alan B. and Levy, Helen, Accounting for the Slowdown in Employer Health Care Costs (January 1997). NBER Working Paper No. w5891. Available at SSRN: https://ssrn.com/abstract=225673

Alan B. Krueger (Contact Author)

Princeton University - Industrial Relations Section ( email )

Princeton, NJ 08544-2098
United States
609-258-4046 (Phone)
609-258-2907 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Helen Levy

University of Chicago - Harris Public Policy ( email )

1155 East 60th Street
Chicago, IL 60637
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
29
Abstract Views
683
PlumX Metrics