Employment Sorting by Size: The Role of Health Insurance (Text Version

Slide presentation from the AHRQ 2009 conference.

On September 16, 2009, Barbara Schone made this presentation at the 2009 Annual Conference. Select to access the PowerPoint® presentation (998 KB) (Plugin Software Help).


Slide 1

Employment Sorting by Size: The Role of Health Insurance

Lan Liang and Barbara Schone
 

 

Slide 2

Goals of Our Analysis

  • To add to the literature on the labor market effects of obesity
  • To investigate whether obesity has an impact on worker sorting
  • Two types of sorting of key interest:
    • Sorting by firm size
    • Sorting by insurance availability at a job
  • Use similar approach to Kapur et al. (2008)

 

Slide 3

The Policy Relevance of Obesity

  • According to the CDC ~ 34% of all adults are obese (2005 - 2006)
  • Obesity is correlated with a number of serious health conditions
  • Expected medical expenses are higher for obese individuals

 

Slide 4

Measuring Obesity

  • Based on Body Mass Index (BMI)
    • BMI = Weight (lb)/Height2 (in) x 703
  • BMI is correlated with body fat (but not perfectly)

 

Slide 5

What Do We Know about Labor Market Outcomes & Obesity?

  • Some evidence that obesity adversely affects wages
  • Mixed evidence that employment is affected
  • Obesity may adversely affect worker productivity
  • Some evidence of discrimination against obese workers
  • Many of the effects vary across men and women

 

Slide 6

How Might Weight Affect Sorting across Firms for Insurance?

  • With higher expected medical costs, obese workers might have greater demand for insurance
  • Higher expected medical costs might lead firms to avoid obese workers since obesity is observable (if there are no full wage offsets)
  • Normal weight people might find insurance less attractive and have reduced demand
  • Net Effect: Insurance coverage could either increase or decrease for obese workers

 

Slide 7

How Might Weight Affect Sorting across Firms by Firm Size?

  • If absenteeism is higher for obese workers, smaller firms might have a harder time adjusting to absenteeism and may be more inclined to avoid obese workers
  • Obese workers may be more attracted to firms with generous benefits (e.g., sick leave) and may be more inclined to work in large firms as a result
  • Net Effect: Obese workers are expected to be more likely to be employed in large firms

 

Slide 8

The Interaction of Firm Size and Insurance

  • Large firms will also be more attractive because they are more likely to offer insurance
  • Due to greater risk-pooling opportunities, an obese worker will have a smaller effect on the pool in a large firm than a small firm
  • Net Effects: Conditional on offering insurance, obese workers may be more likely to be employed in large firms

 

Slide 9

Specific Research Questions

  • How does weight affect the likelihood of being employed in a small firm?
  • How does weight affect the likelihood of being employed in a job that offers insurance?
  • Does weight affect the interaction effects of being in a small firm and being offered insurance?
  • Do the patterns differ between men and women?

 

Slide 10

Data

  • MEPS Full Year Data from 2002-2004
  • Single Employed Persons Aged 21-64
  • N = 14,150
  • Results are weighted and adjust for the complex survey design

 

Slide 11

Measuring BMI

  • Based on self-reported height and weight information
  • 4 Weight Categories
    • Underweight (BMI < 18.5)
    • Normal (18.5 = BMI <25)
    • Overweight (25 = BMI < 30)
    • Obese (BMI = 30)

 

Slide 12

Key Dependent Variables

  • Whether a worker is offered insurance from his main job
  • Whether a worker is employed in a small firm
    • Use firm size = 25 for main results
    • Data report establishment, not firm size
    • Use establishment size and whether a firm has multi-establishments to derive a conservative measure of small firm

 

Slide 13

Descriptive Information

 UnderweightNormal WeightOverweightObese
Proportion of Workers Employed in a Small Firm
All Workers54.441.440.538.5**
Men54.744.343.742.4
Women54.338.935.435.5**
Proportion of Workers Offered Employment-Based Insurance
All Workers64.968.369.673.2***
Men62.063.566.570.2***
Women65.972.474.675.5**

 

Slide 14

Interactions between Firm Size and Offers

 Small Firm & OfferedSmall Firm & No OfferLarge Firm & OfferedLarge Firm & No Offer
Men 
Underweight34.820.126.818.5
Normal18.026.345.710.0
Overweight18.425.348.08.3
Obese21.2*21.2***49.0*8.6
Women 
Underweight25.828.541.83.9
Normal19.719.253.18.0
Overweight18.716.656.18.6
Obese19.216.3**56.5*7.9

 

Slide 15

Key Patterns

  • Relative to Normal Weight Persons:
  • Obese women are less likely to work in a small firm
  • Obese workers are more likely to be offered insurance
  • Obese workers are more likely to work in a large firm that offers insurance
  • Obese men are more likely to work in a small firm that offers insurance (p < .10)

 

Slide 16

Multivariate Analysis

  • Logit Models
    • Being employed in a small firm
    • Being employed in a firm that offers insurance
  • Multinomial Logit with 4 Outcomes:
    • Small firm & offered
    • Small firm & not offered
    • Large firm & offered
    • Large firm & not offered
  • Overall and by Gender
  • Controls include sex, age, race/ethnicity, education, children, health status, region, MSA, unemployment, year dummies

 

Slide 17

Logit Results Odds Ratios

 Pr (Small Firm)Pr (Offered HI)
All: 
Underweight1.74***0.85
Overweight0.911.15**
Obese0.87**1.37***
Men:
Underweight1.481.04
Overweight0.961.12
Obese0.901.40***
Women:
Underweight1.82***0.79
Overweight0.85***1.18*
Obese0.85***1.34***

 

Slide 18

Multinomial Logit Results Odds Ratios

 UnderweightOverweightObese
Ref:  Large/Offer 
Large/No Offer1.100.910.82*
Small/Offer1.95***0.951.01
Small/No Offer1.59*0.85**0.71***
Ref:  Large/No Offer 
Small/Offer1.781.041.22
Small/No Offer1.450.940.86
Ref:  Small/Offer 
Small/No Offer0.820.900.70***

 

Slide 19

Key Findings from Logits

  • Obese workers are (relative to normal weight):
    • Less likely to work in a small firm
    • More likely to work in a firm that offers insurance
    • Small firm result is not statistically significant for men
  • Overweight workers are (relative to normal weight):
    • Less likely to work in a small firm
    • More likely to work in a firm that offers insurance
    • Not statistically significant for men

 

Slide 20

Multinomial Logit Findings

  • Relative to normal weight, obese:
    • Workers are less likely to be in a small firm without insurance than a small firm with insurance
    • Workers are less likely to be in a large firm without insurance than a large firm with insurance
    • Workers are less likely to be in a small firm without insurance than a large firm with insurance offered

 

Slide 21

Implications

  • Firms that offer insurance are not avoiding obese workers
    • Demand effects outweigh supply effects or
    • Maybe there is a full wage offset
  • No statistically significant evidence that small firms are avoiding obese workers (with or without insurance being offered)
  • Driven by women more than men
  • Could we observing behavior driven by normal weight workers rather than obese or overweight workers?

 

Slide 22

Relevance

  • Efficiency of labor markets
  • Efficiency of health insurance

 

Slide 23

Future Steps

  • Add married workers as an additional control group
  • Compare obesity effects to unobservable conditions
  • Consider hires of workers and worker separations
Current as of December 2009
Internet Citation: Employment Sorting by Size: The Role of Health Insurance (Text Version. December 2009. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/news/events/conference/2009/schone/index.html