The impact of small-group health insurance reform

During the 1990s, almost every state imposed restrictions on how insurers sell health insurance policies to small groups hoping to help small employers provide health benefits to workers. I use information on state small-group reforms from primary research and micro data from March Current Population Surveys to study the effect of reform on whether workers receive employer-provided health insurance in Chapter 2. Reforms preventing insurers from discriminating between healthy and unhealthy individuals should help the unhealthy, disadvantage healthy customers, and should reduce the average probability that a worker receives health insurance. I compare the changes in insurance coverage for workers in small firms before and after reform to changes in rates for workers in states that did not reform, controlling for the health insurance coverage of workers in large firms. I find that comprehensive reform decreases the probability that small employers provide health insurance on average by almost two percentage points. Within small firms, low-risk individuals experience a 7.4 percentage point decline in the probability of receiving health insurance through their employer, while high-risk individuals appear to be unaffected.; In the third chapter, I use a unique method to combine confidential data in different locations on over 50,000 employers to study the impact of reform on the price and availability of health insurance for small employers. Regulations governing the use of the 1993 National Employer Health Insurance Survey and the 1996 Medical Expenditure Panel Survey Insurance Component prevent researchers from combining survey data for joint analysis. However, I can conduct regression analysis by constructing appropriate cross-multiplied matrices. Using an identification strategy similar to that in Chapter 2, I find that stringent reforms increase per capita premiums on average by four percent. Employers transfer over two thirds of the extra premium cost to workers by requiring higher contributions. Reform also reduces the percent of workers receiving health insurance through small firms by over two percentage points. Furthermore, the impact appears to vary by medical risk level as expected. Stringent reforms display some intended effects too; they significantly reduce the prevalence of medical underwriting practices for small employers.