Cross-subsidization in the market for employment-related health insurance

Alan C. Monheit, Thomas M. Selden

Research output: Contribution to journalArticle

1 Scopus citations


This paper uses data from the 1987 National Medical Expenditure Survey to examine the nature of equilibrium in the market for employment-related health insurance. We examine coverage generosity, premiums, and insurance benefits net of expenditures on premiums, showing that despite a degree of market segmentation, there was a substantial amount of pooling of heterogeneous risks in 1987 among households with employment-related coverage. Our results are largely invariant to (i) firm size and (ii) whether or not employers offer a choice among plans. Our results suggest the need for caution concerning incremental reforms that would weaken the link between employment and insurance without substituting alternative institutions for the pooling of risks. Published in 2000 by John Wiley & Sons, Ltd.

Original languageEnglish (US)
Pages (from-to)699-714
Number of pages16
JournalHealth Economics
Issue number8
StatePublished - Dec 1 2000
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Health Policy


  • Cross-subsidization
  • Employment-related health insurance

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