Health insurance and employee productivity: Findings from the 2007 Survey of Business Owners

Do firms providing employee health insurance have a higher sales-revenue-per-employee than firms who do not? We attempt to address this question using 543,135 private US businesses from 2007 Survey of Business Owners. Among firms with fewer than 50 employees, those providing health insurance did not have a higher sales-revenue-per-employee, and among firms with 50 or more employees, those providing health insurance had a higher sales-revenue-per-employee. Oaxaca-Blinder decomposition shows that for firms below 50 employees or above 50 employees, gains in sales-revenue-per-employee are driven by differences in endowments and not based on differences in how similar endowments are leveraged. The results broadly suggest that there may not be a “business case†for providing health insurance in firms with fewer than 50 employees. The findings have implications for firm owners aiming to meet the health insurance mandates and for policy makers in understanding the impact of increases in sales-per-employee on the economy and in designing tax breaks and tax credits for business owners providing health insurance to employees.