Katherine Baicker (UCLA) and
Amitabh Chandra (Harvard Univ.)
ABSTRACT
We use variation in medical
malpractice payments driven by the recent “medical
malpractice crisis” to identify the causal effect of rising
health insurance premiums on wages, employment and the
distribution of part-time and full-time work. We estimate
that a 10 percent increase in health insurance premiums
reduces the aggregate probability of being employed by 1.2
percentage points, reduces hours worked by 2.4 percent, and
increases the likelihood that a worker is employed only
part-time by 1.9 percentage points. For workers covered by
employer provided health insurance, a 10 percent increase in
premiums results in an offsetting decrease in wages of 2.3
percent. Thus, rising health insurance premiums may both
increase the ranks of the unemployed and place an increasing
burden on workers through decreased wages for those with
employer health insurance and decreased hours for those who
may be moved from full time jobs with benefits to part time
jobs without.
