Volume 32, Number 4 (Fall) 1997

Feldman, Roger, Bryan Dowd, Scott Leitz, and Lynn A. Blewette. 1997. "The Effect of Premiums on the Small Firm's Decision to Offer Health Insurance." Journal of Human Resources 32(4):635-658.

Many small firms (fewer than 50 employees) do not offer health insurance. We investigated the role of premiums in the small firm’s decision to offer health insurance, using data from a 1993 survey of 2,000 small firms in Minnesota. Selectively-corrected equations were estimated to predict the premiums faced by firms offering and not offering insurance. The elasticity of demand .for health insurance, calculated at the mean of the data, was -3.91 for single coverage and -5.82 for family coverage. We contrast these results to the much lower responsiveness found in experimental studies and suggest that our findings are more likely to model the small firm’s demand for health insurance.

Roger Feldman and Bryan Dowd are professors in the Division of Health Services Research at the University of Minnesota; Scott Leitz and Lynn A. Blewett are researchers at the Department of Health, State of Minnesota. This study was supported by a grant from the Robert Wood Johnson Foundation to the State of Minnesota and a subcontract to the University of Minnesota. The data used in this article can be obtained beginning in May 1998 through April 2001 from Roger Feldman, University of Minnesota, Division of Health Services Research, 420 Delaware Street SE, Box 729. Minneapolis. MN 55455-0381.

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US ISSN 0022-166X

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