The Demand for Health Insurance in the Group Setting: Can You Always Get What You Want?

Journal of Risk and Insurance-March 2007
Vol. 74, No. 1
March 2007
Pauly, M.V. and B. Herring
pp. 115-140(26)

To what extent do health benefits obtained in the employment-based setting reflect individual preferences?  We examine this question by comparing the relationship between person-level characteristics and the plans they obtain in a group setting to the relationship observed in the individual insurance market, using data from the 1996-1997 and 1998-1999 Community Tracking Study's Household Surveys.  We also examine the effect of unions on group choice.  Our structural models of the demand for insurance indicate that plans obtained in the group setting often reflect underlying individual preferences for insurance, but we consistently observe significantly different effects on ethnicity and unionization.

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