Do Minimum Wage Laws Affect Employer-Sponsored Insurance Provision?

58 Pages Posted: 16 Jan 2023 Last revised: 19 Nov 2023

See all articles by Mark Meiselbach

Mark Meiselbach

Johns Hopkins Bloomberg School of Public Health

Jean Marie Abraham

University of Minnesota - Twin Cities - School of Public Health

Abstract

Employers may respond to minimum wage increases by adjusting their health benefits. We examine the impact of state minimum wage increases on employer health benefit offerings using the 2002-2020 Medical Expenditure Panel Survey – Insurance/Employer Component data. Our primary regression specifications are difference-in-differences models that estimate the relationship between within-state changes in employer-sponsored insurance and minimum wage laws over time. We find that a $1 increase in minimum wages is associated with a 0.92 percentage point (p.p.) decrease in the percentage of employers offering health insurance, largely driven by small employers and employers with a greater share of low-wage employees. A $1 increase is also associated with a 1.83 p.p. increase in the prevalence of plans with a deductible requirement, but we do not find consistent evidence that other benefit characteristics are affected. We find no consequent change in uninsurance, likely explained by an increase in Medicaid enrollment.

Keywords: health insurance, employer-sponsored insurance, minimum wages, private insurance, plan benefit design

Suggested Citation

Meiselbach, Mark and Abraham, Jean Marie, Do Minimum Wage Laws Affect Employer-Sponsored Insurance Provision?. Available at SSRN: https://ssrn.com/abstract=4326232 or http://dx.doi.org/10.2139/ssrn.4326232

Mark Meiselbach (Contact Author)

Johns Hopkins Bloomberg School of Public Health ( email )

Wolfe Street
Baltimore, MD 21205
United States

Jean Marie Abraham

University of Minnesota - Twin Cities - School of Public Health ( email )

15-223 Phillips-Wangensteen Building
Box 729, 420 Delaware Street SE
Minneapolis, MN 55455-0392
United States
612-625-4375 (Phone)

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