Analysts have frequently interpreted the uneven distribution of health insurance across firms of varying size as evidence of insurance market failure in the small group market. We explore an additional explanation by considering the relationship between employee preferences for health insurance and its availability at the workplace. We apply a simple model of job choice to data from the 1987 National Medical Expenditure Survey to examine whether workers with weak preferences for health insurance sort themselves into jobs without coverage. Our results for a sample of single workers are consistent with such sorting behavior.

Alan C. Monheit is the director of the Division of Social and Economic Research, and Jessica Prirnoff Vistnes is a senior economist at the Center for Cost and Financing Studies, Agency for Health Care Policy and Research (AHCPR). The views expressed in this paper are those of the authors; no official endorsement by AHCPR or the Department of Health and Human Services is intended or should he inferred. The authors wish to thank Philip Cooper, Barbara Schone, Kathy Swartz, two anonymous referees, and seminar participants at AHCPR and the Georgetown University Health Policy Center for helpful comments. Chao-Sung Yu and Jane Faulman of Social and Scientific Systems, Bethesda, Maryland provided excellent computer programming support. The data used in this analysis can be obtained beginning June 2000 through May 2003 from Alan C. Monheit, (amonheit@ahcpr.gov), Center for Cost and Financing Studies, AHCPR, 2101 East Jefferson Street, Suite 500, Rockville, MD 20852.

© 2002 by the Board of Regents of the University of Wisconsin System

US ISSN 0022-166X

Return to JHR Home Page