We use the 1996 Medical Expenditure Panel Survey to estimate a model of
household demand for employer-based health insurance, explicitly investigating
differences in behavior between households with two potential sources of coverage and
those with one source. Own and cross-price elasticities are estimated for three types of
health plans, including exclusive provider organizations, any provider organizations, and
mixed provider organizations. We find that the premium, family size, income, and
wealth significantly affect demand. Our elasticity estimates reveal an overall, small
behavioral response to changes in price with respect to health plan switching and take-up.
Finally, we discuss the implications of our findings with respect to employer benefit
design.