Gerard Russo, Ph.D. Sang-Hyop Lee, Ph.D. Lawrence Nitz, Ph.D. Thamana Lekprichakul, Ph.D.

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The Effect of Mandatory Employer-Sponsored Health Insurance on the Use of Part-Time versus Full-Time Workers: The Case of Hawaii. Gerard Russo, Ph.D. Sang-Hyop Lee, Ph.D. Lawrence Nitz, Ph.D. Thamana Lekprichakul, Ph.D. Rui Wang, Ph.D. Candidate University of Hawai `i at M noa - PowerPoint PPT Presentation

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  • State Policy and Health Insurance CoverageSaturday, 24 June 2006 10:00-11:15 AMPresentation 3: The Effect of Mandatory Employer-Sponsored Health Insurance on the Use of Part-Time versus Full-Time Workers: The Case of Hawaii. Presenter: Gerard Russorusso@hawaii.edu

    State Health Research and Policy Interest Group MeetingJune 24, 200610:00 AM4:00 PMWashington State Trade & Convention Center

  • Institutional Partners & CollaboratorsHealth Resources & Services Administration, State Planning Grant ProgramHawaii State Department of HealthHawaii Institute for Public Affairs, Hawaii Uninsured ProjectHawaii Health Information CorporationRobert Wood Johnson Foundation, AcademyHealth, State Coverage InitiativeUniversity of Minnesota, State Health Access Data Assistance CenterUniversity of Hawaii, Social Science Research Institute

  • Prepaid Health Care Act of 1974 (Mandatory ESI)PHCA of 1974: requires all private-sector employers to provide health insurance to full-time employees (i.e., 20+ hours per week)Exempt workers: Part-time workers working less than 20 hours per weekLow-earning workers earn less than 86.67 times minimum wage per month (2006: $6.75 x 86.67=$585; 2007: $7.25 x 86.67=$628.)Government employees, self-employed, commission-only workers, seasonal workers, family workersCollective bargaining contracts are exempt.No other State has implemented mandatory ESIEmployee Retirement Income Security Act (ERISA) generally prohibits States from mandating economywide employment-based health and retirement benefits. The Federal government reserves that right.Hawaii has a Congressionally granted ERISA exemption for the PHCA 1974 only.

  • Research Program on Labor Market Effects of Mandatory ESIHealth Insurance CoverageLabor Force UtilizationWagesJob Mobility

  • Research QuestionWhat is the impact of mandatory employer-sponsored insurance (ESI) on the distribution of employees by hours worked?

  • HypothesesMandated ESI increases the proportion of part-time workers as the labor market avoids the regulation.Thurston (1997)Firms utilize full-time employees more intensely because the cost of mandated ESI is fixed per employee. Low marginal cost of an hour of labor among extant employees and declining average cost per hour.Cutler & Madrian (1998)

  • Data Sources CPS Current Population Survey (CPS)Annual Social and Economic (ASEC) Supplement (March Demographic Supplement)Basic Monthly Survey

  • Measure of Hours Worked: Current Population SurveyUsual hours worked per week at main job held last week.Available for all workers 1994-2005.

  • Hawaii Adults Age 19-64by Sector of Employment

  • Hawaii sample size=6,450 49 States & DC sample size=528,284

  • Percent Distribution Private-Sector Employees by Hours Worked: CPS March Supplement 1988-2005.

  • Percent of Private Sector Employees Working 1-19 Hours: CPS March Supplement 1988-2005

  • Percent of Private Sector Employees Working 20-34 Hours: CPS March Supplement 1988-2005

  • Percent of Private Sector Employees Working 35+ Hours: CPS March Supplement 1988-2005

  • SAMPLE SIZE: CPS Basic Monthly Survey 1994-2005 (Hours Worked At Main Job, 1-99)

  • Percent Distribution Non-Collective Bargaining Private-Sector Employees by Hours Worked: CPS Basic Monthly Survey 1994-2005.

  • Percent of Non-Collective Bargaining Private-Sector Employees Working 1-19 Hours: CPS Basic Monthly Survey 1994-2005

  • Percent of Private Sector Employees Working 20-34 Hours: CPS Basic Monthly Survey 1994-2005

  • Percent of Private Sector Employees Working 35+ Hours: CPS Basic Monthly Survey 1994-2005

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    Probability Density of Private-Sector Employees by Hours Worked per Week: Hawaii vs. Nevada CPS Basic Monthly Survey 1994-2005

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    Hawaii vs. Michigan: CPS Basic Monthly Survey 1994-2005

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    Hawaii vs. California: CPS Basic Monthly Survey 1994-2005

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    Hawaii vs. Florida: CPS Basic Monthly Survey 1994-2005

  • Why is the effect small?Regulation is non-binding for most employers and employees.Noncompliance? 2%-5%.

  • Percent of Population Insured by Type of Insurance, CPS 1994-2004:11-Year Average

  • Why is ESI so pervasive nationwide?Lack of adverse selectionEconomies of scale in administrationFavorable tax treatment of insurance premiums

  • Percent of Private Establishments that Offer Health Insurance by Average Wage of Work Force: Hawaii and United States, MEPSIC 2003 SOURCE: Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends, Medical Expenditure Panel Survey-Insurance Component.

  • Hawaii vs. California: Wage Quartile I

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    First-Quartile Wage Rate, CPS Monthly Basic, 1994-2005

    Usual Hours Worked Last Week at Main Job, CA-HI

  • Hawaii vs. California: Wage Quartile II

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    Second-Quartile Wage Rate, CPS Monthly Basic, 1994-2005

    Usual Hours Worked Last Week at Main Job, CA-HI

  • Hawaii vs. California: Wage Quartile III

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  • Hawaii vs. California: Wage Quartile IV

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    Fourth-Quartile Wage Rate, CPS Monthly Basic, 1994-2005

    Usual Hours Worked Last Week at Main Job, CA-HI

  • Percent Distribution of Uninsured Workers by Usual Hours Worked per Week at Main Job: Paid Private Sector Employees

  • Further Research: Model-Based EstimatesControls for Individual Worker Characteristics:Age, Gender, Education, Race, Marital Status, Health Status, Industry of Employment, Firm/Establishment SizeControls for State-Specific Macroeconomic ConditionsUnemployment Rate, GSP Growth Rate, etc.Additional Controls for State-Specific Industrial StructureHealth Insurance Premiums MEPS-IC 1996-2004Exploit the Underlying Panel of Workers in the CPS Basic Monthly SurveyCount Data Models, Multinomial & Ordinal Logit

  • Mahalo!

    This research is funded in part by U.S. Department of Health and Human Services Health Resources & Services Administration State Planning Grant Hawaii State Department of Health.

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