The kindness of strangers: community effects on the rate of employer coverage.

The rate of employer-sponsored insurance (ESI) varies greatly across states. We analyze the factors that account for that variation. We find that the likelihood that a worker is covered by ESI depends on workers' own characteristics and also on those of other workers in the same metropolitan statistical area. Further, in almost all states the percentage of workers covered by ESI is close to the predicted level of coverage, which suggests that state policies that could affect insurance coverage have had little net effect on ESI rates. Hawaii is an exception: Its mandate on employers to offer coverage results in a rate of ESI that is much higher than expected.