TY  - JOUR
AU  - Bhattacharya,Jayanta
AU  - Vogt,William B.
TI  - Employment and Adverse Selection in Health Insurance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12430
PY  - 2006
Y2  - August 2006
UR  - http://www.nber.org/papers/w12430
L1  - http://www.nber.org/papers/w12430.pdf
N1  - Author contact info:
Jay Bhattacharya
117 Encina Commons
Center for Primary Care
and Outcomes Research
Stanford University
Stanford, CA  94305-6019
Tel: 650/736-0404
Fax: 650/723-1919
E-Mail: jay@stanford.edu

William B. Vogt
Senior Economist
RAND Corporation
4570 Fifth Ave
Pittsburgh, PA  15213
Tel: 412.683.2300 X4902
Fax: NA
E-Mail: william.b.vogt@gmail.com
AB  - We construct and test a new model of employer-provided health insurance provision in the presence of adverse selection in the health insurance market. In our model, employers cannot observe the health of their employees, but can decide whether to offer insurance. Employees sort themselves among employers who do and do not offer insurance on the basis of their current health status and the probability distribution over future health status changes. We show that there exists a pooling equilibrium in which both sick and healthy employees are covered as long as the costs of job switching are higher than the persistence of health status. We test and verify some of the key implications of our model using data from the Current Population Survey, linked to information provided by the U.S. Department of Labor about the job-specific human capital requirements of jobs.
ER  -