Employee choice of health plan and consumption of health care under employer-provided plans

For the most part, the provision of private health insurance in the U.S. is through the workplace. When faced with a menu of health insurance plans offered by their employer, employees make two choices: which health plan to purchase and the amount of health care to consume, given their chosen plan. These two choices are intimately related. Since cost structures and attributes of health insurance plans vary, employees choose the health plan that maximizes their utility, given their expected utilization of health care in the coming year. Their choice of health plan in turn influences their actual utilization of health care. In this dissertation, I model the interdependence of the employee's health plan choice and demand for health care within a unified structural framework.; The parameters of the model are estimated using the personnel and health claim data of State of Tennessee employees. Since the dataset contains detailed information about health care consumption, it is possible to separately estimate the demands of mental and physical health care within the model. To estimate the model, person and plan specific factors are used to determine the amount of health care and other goods each employee consumes under each offered health plan. This information is then used to determine the health plan that maximizes the employee's utility.; Since I utilize a structural framework, it is possible to predict employee behavior if the State of Tennessee offered its employees a counterfactual set of health plans to choose from. The results of the counterfactuals provide insight into the value to employees of having a choice of health plans to choose from as well as changes in health plan choice and health care consumption due to changes in the offering of plans.