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NBER finds that when health insurance premiums increase, productivity drops

Posted on October 9, 2012 | No Comments

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A new working paper from Truven Healthcare’s Teresa Gibson, Harvard’s Michael Chernew and the University of Michigan’s A. Mark Fendrick released by the National Bureau of Economic Research (NBER) finds that as health insurance co-payments increase, worker productivity drops. This decrease in productivity is likely to related to employees forgoing medical care.

The paper focuses on employees with chronic pain like arthritis. The authors examined how much employees had to pay for prescription medication under their diverse benefit plans. Past research has found that as the cost of health care services increases, usage decreases. The paper found that employees suffering from chronic pain averaged 76.7 hours absent from work. With every $5 increase in cost-sharing for pain medications, they saw an increase in absenteeism somewhere between 1.3 to 3.1 percent. Although the percentage appears small, the consequences could be significant, and enough to offset any savings derived from hiking up premiums.

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