Union Effects on Health Insurance Provision

Since Freeman and Medoff’s (1984) comprehensive review of what unions do, union density in the U.S. has fallen substantially. During the same period, employer provision of health insurance has undergone substantial changes in extent and form. Using individual data from various supplements to the Current Population Survey and establishment data from the 1993 Robert Wood Johnson Foundation survey, we investigate the effects of unionization on employer provision of health benefits. We find that in addition to increasing coverage by employer-provided health benefits, unions reduce employee cost sharing and substantially increase the probability that employer-provided health plans extend to retirees. The union effects on coverage for current employees and for retirees have risen over time, and our estimates suggest that declining unionization explains about 17-20 percent of the decrease in employerprovided health insurance between 1983 and 1997. * Graduate School of Management, University of California, Irvine ** Department of Economics, University of California, Irvine *** Federal Reserve Bank of San Francisco We thank Leslie McGranahan and session attendees at the International Health Economics Association 2 World Conference for their comments. We also thank Emily Grimm and Carol D’Souza for helpful research assistance. The opinions expressed in this paper do not necessarily represent the views of the Federal Reserve Bank of San Francisco or the Federal Reserve System. Union Effects on Health Insurance Provision and Coverage in the United States