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.