TY - JOUR AU - Bundorf,M. Kate AU - Herring,Bradley AU - Pauly,Mark TI - Health Risk, Income, and Employment-Based Health Insurance JF - National Bureau of Economic Research Working Paper Series VL - No. 11677 PY - 2005 Y2 - October 2005 UR - http://www.nber.org/papers/w11677 L1 - http://www.nber.org/papers/w11677.pdf N1 - Author contact info: Kate Bundorf Health Research and Policy Stanford University HRP T108 Stanford, CA 94305-5405 Tel: 650/725-0067 Fax: 650/725-6951 E-Mail: bundorf@stanford.edu Bradley Herring Department of Health Policy & Management Bloomberg School of Public Health Johns Hopkins University 624 North Broadway, HH #408 Baltimore, MD 21215 Tel: 410-614-5967 Fax: 410-955-6959 E-Mail: bherring@jhsph.edu Mark Pauly Department of Health Care Management University of Pennsylvania 208 Colonial Penn Center 3641 Locust Walk Philadelphia, PA 19104-6218 Tel: NA Fax: NA E-Mail: pauly@wharton.upenn.edu M2 - featured in NBER digest on 2005-10-03 AB - While many believe that an individual’s health plays an important role in both their willingness and ability to obtain health insurance in the employment-based setting, relatively little agreement exists on the extent to which health status affects coverage rates, particularly for those with lower incomes. In this paper, we examine the relationship between health risk and the purchase of group health insurance and whether that relationship differs by a person’s income and whether they obtain coverage in the small, medium, or large group market. Using the panel component of the 1996-2002 Medical Expenditure Panel Survey (MEPS), we find that health risk is positively associated with private health insurance across the different markets, and that this positive relationship is stronger for low and middle income people, particularly in the large group market. Our results are consistent with the existence of adverse selection in the group market in the form of low rates of coverage among low risks due to an absence of risk rating of premiums. We conclude that pooled premiums for low risks, particularly those with low incomes, may represent a more important financial barrier to coverage in voluntary group insurance than high premiums for high risks. ER -