Effect of multiple employer-sponsored health insurance plans on utilization among two-worker families

Objective: An estimated 7.6 percent of the non-elderly population is in a family having multiple employer-sponsored health insurance plans (ESHIPs) concurrently. A family might have multiple ESHIPs when a husband and wife are each eligible for separate employer-sponsored plans. We hypothesized that families would enroll in multiple plans only in the presence of significant premium subsidies and/or the accrual of additional net benefits with dual coverage, which could result in moral hazard. We investigated whether non-elderly individuals in a family with multiple ESHIPs report higher levels of health service utilization.

Methods: We used the 2006-2010 Medical Expenditure Panel Survey Household Component, restricting the sample to families in which both spouses are offered health insurance by their employers (15,349 individuals in 4,979 families). The primary independent variable was a family-level binary indicator reflecting multiple ESHIPs. Utilization was measured by the annual number of physician and non-physician visits in the calendar year prior to the interview. We estimated the relationship between multiple ESHIPs and the utilization measures with a negative binomial model, and a two-stage residual-inclusion model in which the characteristics of each spouses’ employers were used as instrumental variables (IVs). We performed these estimates for the total sample population and stratified by the presence of children in the family. Socio-demographic characteristics, health status, and location of residence were also controlled.

Results: On average, respondents visited physicians 2.78 times and non-physicians 1.60 times in the calendar year. Among those eligible for multiple ESHIPs, 38.7 percent of families were enrolled in two ESHIPs. Without controlling for potential endogeneity, among respondents with children, those covered by multiple ESHIPs visited physicians 0.26 times (average marginal effect(AME)=0.26;p-value=0.02) more per year, compared to individuals enrolled in a single ESHIP. In the non-linear IV estimation, the constructed AME was 0.45(p-value=0.34) among respondents with children. The estimation results were not statistically significant for the total sample population, and among families without children. Notably, the non-linear IV model did not pass the endogeneity test(p-value =0.07), implying that enrollment in multiple ESHIPs is more likely due to large subsidies rather than selection.

Conclusion:  Although policymakers generally focus on the consequences of being uninsured, our study suggests that multiple ESHIPs within families may lead to inefficient welfare losses via moral hazard. Given our findings that the primary driver of dual coverage decisions is generous premium subsidies from employers, policies might address the inefficiencies created by the tax incentives to provide such subsidies.