1 This research is funded in part through a U.S. Health Resources and Services Administration, State Planning Grant to the Hawaii State Department of Health. Sub-Contract Research Corporation of the University of Hawaii. Research conducted by the University of Hawaii, Social Science Research Institute in collaboration with the Hawaii State Department of Health, Hawaii Institute for Public Affairs: Hawaii Uninsured Project and the Hawaii Health Information Corporation. The Effect of Mandatory Employer- Sponsored Health Insurance on the Use of Part-Time versus Full-Time Workers: The Case of Hawaii. Gerard Russo, Ph.D. Sang-Hyop Lee, Ph.D. Lawrence Nitz, Ph.D. Thamana Lekprichakul, Ph.D. Rui Wang, Ph.D. Candidate University of Hawai`i at Mānoa Abdul Jabbar, Ph.D. International Islamic University, Islamabad 24 June 2006
The Effect of Mandatory Employer-Sponsored Health Insurance on the Use of Part-Time versus Full-Time Workers: The Case of Hawaii. Gerard Russo, Ph.D. Sang-Hyop Lee, Ph.D. Lawrence Nitz, Ph.D. Thamana Lekprichakul, Ph.D. Rui Wang, Ph.D. Candidate University of Hawai `i at M ānoa - PowerPoint PPT Presentation
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1
This research is funded in part through a U.S. Health Resources and Services Administration, State Planning Grant to the Hawaii State Department of Health. Sub-Contract Research Corporation of the University of Hawaii. Research conducted by the University of Hawaii, Social Science Research Institute in collaboration with the Hawaii State Department of Health, Hawaii Institute for Public Affairs: Hawaii Uninsured Project and the Hawaii Health Information Corporation.
The Effect of Mandatory Employer-Sponsored Health Insurance on the Use of Part-Time versus Full-Time Workers: The Case of Hawaii.
Gerard Russo, Ph.D.Sang-Hyop Lee, Ph.D.
Lawrence Nitz, Ph.D.Thamana Lekprichakul, Ph.D.
Rui Wang, Ph.D. CandidateUniversity of Hawai`i at Mānoa
Abdul Jabbar, Ph.D.International Islamic University, Islamabad
24 June 2006
2
State Policy and Health Insurance CoverageSaturday, 24 June 2006 10:00-11:15 AM
Presentation 3: “The Effect of Mandatory Employer-Sponsored Health Insurance on the Use of Part-Time versus Full-Time
Workers: The Case of Hawaii.” Presenter: Gerard Russo
Institutional Partners & Collaborators Health Resources & Services Administration, State
Planning Grant Program Hawaii State Department of Health Hawaii Institute for Public Affairs, Hawaii Uninsured
Project Hawaii Health Information Corporation Robert Wood Johnson Foundation, AcademyHealth,
State Coverage Initiative University of Minnesota, State Health Access Data
Assistance Center University of Hawaii, Social Science Research Institute
4
Prepaid Health Care Act of 1974 (Mandatory ESI) PHCA of 1974: requires all private-sector employers to provide health
insurance to full-time employees (i.e., 20+ hours per week) Exempt workers:
Part-time workers working less than 20 hours per week Low-earning workers earn less than 86.67 times minimum wage per
month (2006: $6.75 x 86.67=$585; 2007: $7.25 x 86.67=$628.) Government employees, self-employed, commission-only workers,
seasonal workers, family workers Collective bargaining contracts are exempt.
No other State has implemented mandatory ESI Employee Retirement Income Security Act (ERISA) generally prohibits
States from mandating economy–wide employment-based health and retirement benefits. The Federal government reserves that right.
Hawaii has a Congressionally granted ERISA exemption for the PHCA 1974 only.
5
Research Program on Labor Market Effects of Mandatory ESI
Health Insurance Coverage Labor Force Utilization Wages Job Mobility
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Research Question
What is the impact of mandatory employer-sponsored insurance (ESI) on the distribution of employees by hours worked?
7
Hypotheses
Mandated ESI increases the proportion of part-time workers as the labor market avoids the regulation. Thurston (1997)
Firms utilize full-time employees more intensely because the cost of mandated ESI is fixed per employee. Low marginal cost of an hour of labor among extant employees and declining average cost per hour. Cutler & Madrian (1998)
8
Data Sources CPS Current Population Survey (CPS) Annual Social and Economic (ASEC)
Measure of Hours Worked: Current Population Survey
Usual hours worked per week at main job held last week.
Available for all workers 1994-2005.
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Hawaii Resident Population Age 19-64
Military, Not-in-Labor-Force, Unemployed,Uncompensated Worker, Zero Hours, or Variable Hours
Civilian Workers Receiving Compensation1-99 Hours Per Week
Private Employees Self-Employed Government Employees
Collective Bargaining Non-Collective Bargaining
Hawaii Adults Age 19-64by Sector of Employment
11
0
.1
.2.3
De
nsi
ty
0 20 40 60 80 100
Hours Worked
Hawaii U.S.
Probability Density of Non-Collective Bargaining Private-Sector Employees by Hours Worked Per Week: CPS ASEC 1995-2005
Hawaii sample size=6,450
49 States & DC sample size=528,284
12
Percent Distribution Private-Sector Employees by Hours Worked: CPS March Supplement 1988-2005.
1-19 Hours 20-34 Hours 35+ Hours
Hawaii 4.86% 13.49% 81.64%
49 States & DC 4.09% 11.19% 84.71%
Nevada 1.77% 8.10% 90.13%
Michigan 5.15% 12.22% 82.63%
California 3.71% 11.77% 84.52%
Florida 2.62% 10.14% 87.24%Source: University of Hawaii weighted tabulations. Current Population Survey (CPS), Annual Social and Economic Supplement (ASEC) 1988-2005. Based on usual hours worked at main job. Excludes public sector workers, self-employed, and workers subject to collective bargaining.
13
Percent of Private Sector Employees Working 1-19 Hours: CPS March Supplement 1988-2005
2.62%3.71%
5.15%
1.77%
4.86%4.09%
0%
1%
2%
3%
4%
5%
6%
Perc
en
t P
art
-Tim
e
14
Percent of Private Sector Employees Working 20-34 Hours: CPS March Supplement 1988-2005
10.14%11.77%
12.22%
8.10%
13.49%11.19%
0%2%4%6%8%
10%12%14%16%
US
Hawai
i
Nevad
a
Mic
higan
Califo
rnia
Florid
a
Pe
rce
nt
20
-34
15
Percent of Private Sector Employees Working 35+ Hours: CPS March Supplement 1988-2005
87.24%84.52%82.63%
90.13%
81.64%84.71%
74%76%78%80%82%84%86%88%90%92%
US
Hawai
i
Nevad
a
Mic
higan
Califo
rnia
Florid
a
Pe
rce
nt
Fu
ll-T
ime
16
SAMPLE SIZE: CPS Basic Monthly Survey 1994-2005 (Hours Worked At Main Job, 1-99)
Number of Observations
State All Civilian WorkersNon-Collective Bargaining Private-Sector Employees
Hawaii 86,330 59,448
Nevada 114,276 90,372
Michigan 251,013 193,603
California 573,180 420,887
Florida 314,022 233,753
Total 1,338,821 998,063
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Percent Distribution Non-Collective Bargaining Private-Sector Employees by Hours Worked: CPS Basic Monthly Survey 1994-2005.
1-19 Hours 20-34 Hours 35+ Hours
Hawaii 4.10% 12.51% 83.39%
49 States & DC
Nevada 1.59% 7.79% 90.62%
Michigan 3.87% 11.39% 84.74%
California 3.17% 11.21% 85.62%
Florida 2.31% 9.95% 87.74%Source: University of Hawaii weighted tabulations. Current Population Survey (CPS), Basic Monthly Survey 1994-2005. Based on usual hours worked at main job. Excludes public sector workers, self-employed, and workers subject to collective bargaining.
18
Percent of Non-Collective Bargaining Private-Sector Employees Working 1-19 Hours: CPS Basic Monthly Survey 1994-2005
2.31%3.17%
3.87%
1.59%
4.10%
0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%
Perc
en
t P
art
-Tim
e
19
Percent of Private Sector Employees Working 20-34 Hours: CPS Basic Monthly Survey 1994-2005
9.95%11.21%11.39%
7.79%
12.51%
0.0%
2.0%4.0%
6.0%8.0%
10.0%12.0%
14.0%
Perc
en
t 20-3
4
20
Percent of Private Sector Employees Working 35+ Hours: CPS Basic Monthly Survey 1994-2005
87.74%85.62%84.74%
90.62%
83.39%
78%
80%82%
84%86%
88%90%
92%
Perc
en
t F
ull-T
ime
21
0
.02
.04
.06
.08
.1
Density
0 20 40 60 80 100 Hours
NV HI
Probability Density of Private-Sector Employees by Hours Worked per Week: Hawaii vs. Nevada CPS Basic Monthly Survey 1994-2005
22
0
.02
.04
.06
.08
.1
Density
0 20 40 60 80 100 Hours
MI HI
Hawaii vs. Michigan: CPS Basic Monthly Survey 1994-2005
23
0
.02
.04
.06
.08
.1
Density
0 20 40 60 80 100 Hours
CA HI
Hawaii vs. California: CPS Basic Monthly Survey 1994-2005
24
0
.02
.04
.06
.08
.1
Density
0 20 40 60 80 100 Hours
FL HI
Hawaii vs. Florida: CPS Basic Monthly Survey 1994-2005
25
Why is the effect small?
Regulation is non-binding for most employers and employees.
Noncompliance? 2%-5%.
26
Percent of Population Insured by Type of Insurance, CPS 1994-2004:11-Year Average
Medicare Medicaid Tricare ESI Private
Sub-TotalInsuredTotal Uninsured Total
Hawaii 13.2 11.0 10.2 66.0 73.7 90.4 9.6 100.0
USA 13.2 11.4 3.4 61.4 70.4 84.8 15.2 100.0
Nevada 12.4 7.0 4.3 63.9 71.1 82.2 17.8 100.0
Michigan 13.2 11.9 1.3 69.8 76.9 89.2 10.8 100.0
California 11.0 14.5 3.0 54.8 62.9 80.2 19.8 100.0
Florida 18.1 10.6 4.4 53.8 65.2 81.9 18.1 100.0
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Why is ESI so pervasive nationwide?
Lack of adverse selection Economies of scale in administration Favorable tax treatment of insurance
premiums
28
Percent of Private Establishments that Offer Health Insurance by Average Wage of Work Force: Hawaii and United States, MEPS–IC 2003
100.0%88.2%
90.2% 86.2%77.8% 79.7%
72.0%
56.2%39.0%
59.1%
0%
20%
40%
60%
80%
100%
120%
Quartile I Quartile
II
Quartile
III
Quartile
IV
Total
Average Wage SOURCE: Agency for Healthcare Research and Quality, Center for Financing, Access and Cost Trends, Medical Expenditure Panel Survey-Insurance Component.