Employment Change and Continuation of Health Insurance Coverage

by Jacob Alex Klerman, Omar Rahman

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Most health insurance coverage in the U.S. is tied to an employment relation. This institutional arrangement poses special problems for job losers and job changers. Using data from the Survey of Income and Program Participation (SIPP), this study, in six sections: (1) examines the dynamic link between employment and health insurance, looking at Consolidated Omnibus Budget Reconciliation Act (COBRA) and COBRA-like coverage from several different angles; (2) provides an overview of levels and trends of health insurance coverage in the U.S. and their link to the employment relation; (3) describes the SIPP data; (4) examines the potential efficacy of COBRA coverage for solving the problem of the uninsured in the U.S. today; (5) examines recent reports that only about ten percent of COBRA eligible workers purchase the coverage; and (6) uses the data to compare the levels of coverage for job leavers before and after the implementation of the legislation. The results suggest that the non-employed are less likely to be covered by health insurance than the employed. The problem is especially concentrated among the unemployed (a small share of the non-employed). Nevertheless, continuation coverage is unlikely to have a major effect on the levels of non-coverage.

Originally published in: Health Benefits and the Workforce, 1992, pp. 93-104.

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