Household Demand for Health Insurance: Price and Spouse's Coverage

Abstract

Demand for employment-based insurance is typically treated as an individual rather than a household decision. Dual-earner households are now the modal U.S. married household, however, and most firms offer family coverage as an option available to employees. Findings from a model estimating married workers' take-up of their own insurance with their own and their spouses' offers indicate that both own price and potential coverage under spouses' plans are important determinants of take-up. We find evidence of selection into jobs offering insurance among wives but not husbands. Findings also suggest that dual-earners are not aware of the potential wage/benefit trade-off. Data are from the 1996 panel of SIPP.

Keywords: employment-based health insurance, wage/benefit trade-off, dual-earner households, health insurance offer and take-up

JEL Classification: I10, J32, J12, J15