Employer-Sponsored Health Insurance Premiums and Income in US Tax Data

Abstract

The distribution of employer-sponsored health insurance premiums in the United States is difficult to fully characterize with survey data. Using administrative tax data, we plot the population distribution of premiums and provide new evidence about the relationship between premiums and demographic characteristics, such as income. First, we demonstrate that the distribution of premiums measured in the tax data is comparable to survey data. Then we leverage detailed individual-level information for the population of tax filers to show that those with higher incomes are more likely to have an employer-sponsored insurance (ESI) policy and, conditional on having a policy, select more expensive plans. In fact, those in the top 10 percent of the income distribution account for 21 percent of aggregate ESI premiums. Even with these disparities though, inequality in ESI spending is less than half of that in income overall.

Publication
Journal of Public Economics, Conditionally Accepted

The distribution of employer-sponsored health insurance premiums in the United States is difficult to fully characterize with survey data. Using administrative tax data, we plot the population distribution of premiums and provide new evidence about the relationship between premiums and demographic characteristics, such as income. First, we demonstrate that the distribution of premiums measured in the tax data is comparable to survey data. Then we leverage detailed individual-level information for the population of tax filers to show that those with higher incomes are more likely to have an employer-sponsored insurance (ESI) policy and, conditional on having a policy, select more expensive plans. In fact, those in the top 10 percent of the income distribution account for 21 percent of aggregate ESI premiums. Even with these disparities though, inequality in ESI spending is less than half of that in income overall.

Corbin Miller
Corbin Miller
Economist

Corbin Miller is an Applied Microeconomist studying topics in Public Finance, Economics of Education, Health Economics, and Labor Economics