Pathways Between Minimum Wages and Health: The Roles of Health Insurance, Health Care Access and Health Care Utilization

Abstract

This study contributes to recent work on the relationship between minimum wages and health by examining potential underlying mechanisms. Specifically, the roles of health insurance, health care access and utilization are explored. By analyzing Current Population Survey data for the years 1989–2009 and by estimating DD models, I find that higher minimum wages increase health insurance coverage, in particular individually purchased insurance, among low-educated individuals. By estimating data from the Behavioral Risk Factor Surveillance System for the same period, I furthermore provide evidence for improvements in health care access/affordability and increased health care utilization following minimum wage increases.

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Notes

  1. 1.

    Several states were missing in the BRFSS in the early years of the analysis: Alaska (1989–1990), Arkansas (1989, 1990 and 1992), Colorado (1989), Delaware (1989), the District of Columbia (1995), Kansas (1989–1991), Louisiana (1989), Mississippi (1989), Nevada (1989–1991), New Jersey (1989–1990), Rhode Island (1994), Vermont (1989) and Wyoming (1989–1993). In additional specifications, I find that the results remain similar when using a balanced panel, which suggests that the main estimates are not driven by different compositions of the control group states.

  2. 2.

    See: https://www.dol.gov/whd/state/stateminwagehis.htm.

  3. 3.

    The data for state-level EITC programs are obtained from Tax Credits for Working Families, Tax Policy Center of the Urban Institute and Brookings Institution, and the National Conference of State Legislatures.

  4. 4.

    The data for the timing of TANF and for statewide waivers are obtained from the US Department of Health & Human Services.

  5. 5.

    In additional specification, I control for marital status, which is excluded from the main models since it could be argued that it is potentially an outcome of minimum wages and therefore a “bad control” (Angrist and Pischke 2009). The results remain unchanged when including marital status from the analysis.

  6. 6.

    In additional models, I replace state-specific linear time trends with state-specific quadratic time trends. In line with previous work by Horn et al. (2017), the estimates remain very similar.

  7. 7.

    In line with previous work on health-related effects of minimum wages (Horn et al. 2017), the results in my study are robust to the use of nonlinear model.

  8. 8.

    While Horn et al. (2017) use the same first comparison group, their second group consists of college-educated adults between the ages 18 and 54.

  9. 9.

    When using lead minimum wage rates, I find that the results are substantially smaller while still showing the same direction. The only outcome for which the estimate shows any statistical significance (p < 0.10) is individually purchased coverage. The analysis of leads in the framework of this study is not ideal to capture pre-treatment trends and potential anticipatory effects because states with effective minimum wages above the federal level increased their rates several times throughout the study period.

  10. 10.

    These numbers correspond to employee single contributions for all firm sizes using and are obtained using data from the Medical Expenditure Panel Survey – Insurance Component (MEPS-IC).

  11. 11.

    In additional tests for of exogeneity, I find that minimum wages are not impacted by any of the outcome variables examined in this study or by state unemployment rates, which suggests that reverse causality is not driving the main findings of the analysis. These results are not shown in the paper, but are available upon request.

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Acknowledgements

I thank Catherine Maclean, anonymous referees, seminar participants at the University of Konstanz and participants at the Minimum Wages and Health session at the 8th Annual Conference of the American Society of Health Economists (2019).

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Correspondence to Otto Lenhart.

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Lenhart, O. Pathways Between Minimum Wages and Health: The Roles of Health Insurance, Health Care Access and Health Care Utilization. Eastern Econ J 46, 438–459 (2020). https://doi.org/10.1057/s41302-019-00152-5

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Keywords

  • Minimum wages
  • Health
  • Pathways
  • Health care access
  • Health behaviors

JEL Classification

  • I1
  • I12
  • I13