This brief seeks to answer the question in the title by analyzing data from the Health and Retirement Study (HRS), a nationally representative survey of older Americans. New questions in the HRS enable researchers to compare the value that workers place on health insurance with their perceptions about the cost of coverage. The comparison of cost with willingness-to-pay is important for two reasons. First, it helps us understand why some workers and their families do not have health insurance. In one sense, the reason is straightforward. The overwhelming majority -- 85 percent -- of uninsured workers of all ages are either ineligible for coverage that their employer provides or else work for an employer that does not offer coverage. This absence of employer-provided coverage leaves them to seek health insurance on the individual market, where both prices and denial rates are high. But the lack of coverage raises the question of why some employers, but not others, offer health insurance. One explanation is simply that "good jobs" offer health insurance, and "bad jobs" do not. However, economic theory suggests that this notion is too simplistic. Employers will offer benefit packages to appeal to the types of employees they wish to attract -- subject to the constraints of minimum wage laws, anti-discrimination regulations, and social norms. Employees will "pay" for this health insurance in the form of a reduced cash wage. If employers believe that actual and prospective employees value health insurance more highly than additional cash, perhaps because of the preferential tax treatment and risk pooling obtained at the employer level, they will offer insurance; otherwise, they will not. This does not mean that employees going without health insurance like their situation -- they simply prefer it to the alternative of a lower cash wage. If this theory is correct, then the insured and the uninsured should differ substantially in their willingness to pay for health insurance -- a hypothesis that we test using the HRS data. The second reason to establish how much workers value health insurance is that willingness to pay will influence both the effectiveness and distributional consequences of strategies to increase coverage. Some policy proposals and existing programs require individuals to purchase health insurance, while providing subsidies targeted to low-income households. Others offer such households subsidized insurance on a voluntary basis. If the currently uninsured place a low value on coverage, then a voluntary program may have little effect, while compulsion would make them worse off, unless accompanied by generous subsidies. But if we are able to identify factors that influence the value individuals place on health insurance, it may be possible to target interventions to increase voluntary take-up or to reduce the burden of a mandate. For example, if those who currently place a low value on health insurance do so because they are financially unsophisticated, then a program of financial education may increase coverage. But if they are simply too poor to afford the premiums, then education may have little effect, and a program might require subsidies targeted at low-wage workers.
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