Where low-wage employees work, who their colleagues are, and spouses' wage level affect health insurance coverage and cost
Research Activities September 2011, No. 373
Different provisions in the Affordable Care Act (ACA), such as tax credits and penalties for employers for health insurance coverage of workers, vary by employer size and average wage level paid to workers. To illuminate the extent to which low-wage workers and their employers may be affected by different provisions in the ACA, Jessica Vistnes, Ph.D., of the Agency for Healthcare Research and Quality, and Alan C. Monheit, Ph.D., M.A., of the University of Medicine and Dentistry of New Jersey, analyzed data from the 2006 Medical Expenditure Panel Survey-Insurance Component. They examined offers of coverage and cost-sharing requirements by the wage distribution and firm size of employers to find out how employer-sponsored insurance varies by these dimensions. They also considered the employment circumstances of a worker's spouse.
They found that where low-wage workers are employed, who their colleagues are, and their spouses' wage levels are important factors in determining low-wage workers' access to coverage and the cost and generosity of coverage. Results showed that 75.3 percent of low-wage employees (those earning less than $10.50 per hour) work at employers with a majority of low-wage workers ("low-wage employers"), but there is substantial variation in access to coverage within this category. For example, insurance offer rates of low-wage employers with fewer than 25 workers were 10 percent for those employing only low-wage workers compared with 46.4 percent for firms with low-, middle- (between $10.50 and $23.50 per hour) and high- (more than $23.50 per hour) wage workers. In addition, employee premium contributions at the smallest low-wage employers (fewer than 25 employees) and small employers with no low-wage workers are strikingly different, $1,008 compared with $602. Low-wage workers at establishments where low-wage workers are the minority fared better—across all firm sizes, they faced lower single premium contributions than low-wage workers in low-wage establishments. The study also found that low-wage workers were more likely to be insured if they were married to spouses earning a high wage.
More details are in "The health insurance status of low-wage workers: The role of workplace composition and marital status," by Drs. Vistnes and Monheit, in the May 2, 2011 Medical Care Research and Review [Epub ahead of print]. Reprints (AHRQ Publication No. 11-R051) are available from the AHRQ Publications Clearinghouse.