اصلاحات بازار بیمه سلامت و غرامت کارمند: مورد رتبه بندی جامعه ی خالص در نیویورک

Pure community rating, which was enacted to improve access to health insurance in New York's small group market in 1993, prevents carriers from charging different premiums based on the ages of a firm's workers. If small firms were adjusting compensation packages prior to reform to offset higher health care costs of older workers, then community rating could lead to greater relative wages for older workers post reform and not necessarily induce adverse selection that results in changes in who is insured. I present evidence showing that relative wages of older workers in small firms increased in comparison with other states and with large firms within New York following reform.

Health care costs have risen substantially since 2000 after a short period in the mid and late 1990s when the rise in costs stalled.1 Debate over how best to reform health care delivery has likewise picked up steam. Of particular concern are the costs faced by small businesses in providing health care to workers. This paper uses the case of health insurance market reform in New York to test whether legislated changes in the small group market affect how firms compensate workers. In the process, it provides insights into whether wages are altered to offset the costs of health insurance. If they are, some market reforms may lead to changes in wages but not necessarily induce adverse selection that results in changes in who is insured. New York enacted premium reform in their small group market in 1993. After 1993, insurance companies were no longer able to vary premiums on the basis of individual risk factors such as age. They could only use geographic location to set premiums. Pure community rating differs remarkably from the prior policy regime of underwriting, where specific employee characteristics were used to set the premium for the group. Other research (Buchmueller and DiNardo, 2002) found no detectable relative impact on insurance coverage in New York following reform. One potential explanation is that firms were able to alter compensation packages to adjust to the reform, thus avoiding the feared adverse selection that a reform like pure community rating could create. This would be true if firms had been offsetting the differing costs of health insurance with wage differences prior to reform. Following passage of pure community rating in New York, I observe whether or not small firms increased the wages of their older workers (relative to younger workers) because the relative cost of insuring them fell. As a test of whether such changes were the result of the reform and not some other concurrent change in New York, I compare changes in small firms with changes over the same period in large firms. I also use small firms in other states as a comparison group. Both large firms in New York and firms in other states were not subject to pure community rating. The results indicate that the wage gap between older and younger workers grew following reform in comparison with both control groups. The paper is a contribution to three important lines of research. First, it helps in the understanding of how reforming the health care system through altering the costs faced by employers could directly influence on how firms compensate workers. Second, given that other estimates have shown that insurance coverage at small firms in New York did not change after reform, it provides evidence consistent with a tradeoff of wages and fringe benefits. This is a finding that has been difficult to show in the empirical literature due to worker and firm heterogeneity. Finally, it provides information about the role of non-wage benefits in age-compensation profiles. The next section discusses some of the background, both conceptual and empirical, for each of these lines of research. In subsequent sections, I describe the data, outline the empirical approach, and present the results.

The results of this paper suggest reforms in the small group market that alter the costs of providing coverage to particular groups of workers are likely to be offset by changes in wages for workers, especially in cases where the effects on health insurance coverage are small. This paper examined the case of one such reform—pure community rating in New York. In addition to understanding the effects of pure community rating, this paper provides insight into how firms compensate workers. Empirically estimating if and how wages are altered to offset the costs of providing health insurance benefits is difficult given the inability to control completely for differences across workers and firms. The arguably more interesting question of whether these tradeoffs alter the compensation of specific groups of workers has barely been addressed. Attempts to estimate the relationship between workers with higher health care costs and their relative wages must struggle to control for the underlying heterogeneity across workers that are correlated with their higher health care costs, in addition to heterogeneity across firms. Promising research in this area will need to continue to exploit exogenous variation in the health care costs of different groups of workers. This paper applied the case of community rating in New York to this question. Although not all estimates are statistically significant, most comparisons revealed that the relative wages for older workers at small firms increased following reform, thus suggesting that there exists a health insurance-wage tradeoff on the basis of age. For decades, economists have been analyzing the steepness of age-earnings profiles and attempting to explain why they differ from age-productivity profiles. The evidence presented in this paper suggests that age-compensation profiles are steeper than age-earnings profiles in an experience-rating regime. Pure community rating makes the age-earnings profile steeper and narrows the difference between the slopes of the age-compensation profile and age-wage profile.