The Great Recession and Workers' Health Benefits

Abstract

During a recession, cost-sharing of employer-sponsored health benefits could increase to reduce labor costs in the U.S. Using a variation in the severity of recession shocks across industries, I find evidence that the enrollment rate of high deductible health plans (HDHPs) among workers covered by employer sponsored health benefits increased more among firms in industries that experienced severe recession shocks. As potential mechanisms, I study employer-side and worker-side mechanisms. I find that employers changed health benefit offerings to force or incentivize workers to enroll in HDHPs. But I find little evidence of an increase in workers' demand for HDHPs due to a reduction in income. These results suggest that the HDHP enrollment rate increased during the Great Recession, as employers tried to save costs of offering health benefits. (C) 2018 Elsevier B.V. All rights reserved.