Employer-sponsored health insurance and labor market outcomes for men in same-sex couples: Evidence from the advent of pre-exposure prophylaxis

In the United States, the cost of providing employer-sponsored health insurance (ESI) varies for employers based on the medical expenditures of their employees, a practice known as “experience rating”. Experience rating increases the cost of employing workers who have greater medical expenditures, one example being men in same-sex couples. To study whether ESI affects labor market outcomes for men in same-sex couples, I use the 2012 advent of Pre-Exposure Prophylaxis (PrEP), a $24,000 per year drug that effectively prevents Human Immunodeficiency Virus (HIV) acquisition. Using American Community Survey data and a difference-in-difference empirical approach – comparing post-PrEP changes in earnings among men who have ESI – I find that annual earnings for men in same-sex couples decline by $2,650 (approximately 3.9%) relative to comparable men after PrEP becomes available. For those who are most likely to be taking Truvada (the brand name for PrEP), such as young men and white men, effects on earnings are considerably larger. I also observe a 3.7 percentage point (4.6%) decline in ESI prevalence and a 0.8 percentage point (10.7%) increase in part-time employment among men in same-sex couples. Event studies provide support for a causal interpretation for my findings. My estimates are also robust to placebo analyses, various specification permutations, and a range of sensitivity checks.