Associations between minimum wage policy and access to health care: evidence from the Behavioral Risk Factor Surveillance System, 1996-2007

Objectives. We examined whether minimum wage policy is associated with access to medical care among low-skilled workers in the United States.Methods. We used multilevel logistic regression to analyze a data set consisting of individual-level indicators of uninsurance and unmet medical need from the Behavioral Risk Factor Surveillance System and state-level ecological controls from the US Census, Bureau of Labor Statistics, and several other sources in all 50 states and the District of Columbia between 1996 and 2007.Results. Higher state-level minimum wage rates were associated with significantly reduced odds of reporting unmet medical need after control for the ecological covariates, substate region fixed effects, and individual demographic and health characteristics (odds ratio = 0.853; 95% confidence interval = 0.750, 0.971). Minimum wage rates were not significantly associated with being uninsured.Conclusions. Higher minimum wages may be associated with a reduced likelihood of experiencing unmet medical need among low-skilled workers, and do not appear to be associated with uninsurance. These findings appear to refute the suggestion that minimum wage laws have detrimental effects on access to health care, as opponents of the policies have suggested.Minimum wage laws have long been advanced as policy mechanisms to improve the economic conditions of the working poor. Recently, questions have been raised about the true net benefit of such policies for low-skilled workers. Although income gains arising from minimum wage increases are clearly beneficial, these policies may also have secondary effects that could negatively affect low-skilled workers.The adverse effect most commonly considered is a potential contraction of employment in the low-wage sector as firms employ fewer workers or limit hours to offset the added payroll. Of particular interest in the realm of public health, however, is the possibility that minimum wage laws may substantially reduce access to health care. Research has yet to clarify this relationship.Competing hypotheses have been advanced that describe both positive and negative effects of minimum wage increases on health care access. Proponents of higher minimum wage laws suggest that the direct income-increasing effect of such interventions may be improvements in access to care, as workers are better able to afford out-of-pocket health care expenses such as insurance premiums, deductibles, and copayments. With greater disposable income available following wage hikes, affected workers would then be less likely to experience cost-related barriers to accessing medical care. These hypotheses, building on recent empirical literature documenting associations between higher income and better access to health care,^1–5 propose that increases in workers'' hourly wage will bolster their health care access.Alternatively, opponents of the policies warn that higher minimum wages will lead to unintended effects that will directly and indirectly weaken access to care for the working poor. Some economists have argued that employers may offset increases in the minimum wage directly by cutting health insurance benefits or by offering less generous benefit plans.^6–8 Minimum wage opponents have also argued that increases in the minimum wage depress employment, which could result in a net worsening in access to health care and in the economic conditions of vulnerable populations through a reduction in low-wage employment opportunities.After remaining at $5.15 since 1997, the federal minimum wage increased to $5.85 in July 2007 as part of a 3-step increase to the current $7.25 rate. During the 10 years between increases, the real value of the minimum wage had eroded to equal its lowest point in the preceding 50 years, whether defined in real terms or as a proportion of average wages.⁹ In many areas of the United States, even this newly increased minimum wage was not enough to keep workers and their dependents out of poverty, as the $12 168 earned by a full-time minimum wage earner in 2007 represented only 70% of the federal poverty limit of $17 170 for a family of three.¹⁰In response to the diminishing real value of the federal standard between 1997 and 2007, many states and municipalities enacted policies mandating higher minimum wages for workers in their jurisdictions. At the time of the 2007 federal wage hike, 31 states and the District of Columbia had passed laws setting higher wage standards, none of which was surpassed by the federal increase.⁹At this intersection of poverty and health care access, the minimum wage may be a policy tool with potential implications for health outcomes, but little empirical evidence currently exists to clearly determine whether access to care for low-skilled workers will be helped or harmed by changes to minimum wage policy. Although the employment effects of minimum wage laws have been extensively researched, the exact nature of the relationship between the policies and employment opportunities is hotly debated among economists. Whereas some researchers have found that minimum wage hikes lead to a rise in unemployment,^11–15 others have found that they enhance employment.^16–20Far less empirical attention has been paid to other effects of minimum wages, such as the potential effect on access to health care. Simon and Kaestner²¹ used data from the 1979–2000 Current Population Survey (CPS) to investigate the association between the minimum wage and workers'' receipt of fringe benefits such as health insurance and pensions. They found that increased minimum wages were associated with an increased probability of receiving health insurance and pensions, but concluded that the absence of a consistent differential effect between low- and high-skilled workers suggested “that the minimum wage had no causal effect on low-wage workers'' fringe benefit receipt.”^21(p52)Simon and Kaestner''s study appears to be the only one published to directly examine the association between minimum wages and provision of employer-sponsored health insurance, and to our knowledge none has examined other measures of health care access. We sought to extend this line of empirical research into the effects of the minimum wage and fill the gap in the literature by building on prior works in several important ways.First, we employed more recent data that capitalize on the proliferation of state-level minimum wage laws between 2000 and 2007 to capture greater variance in minimum wage rates throughout the United States. Second, whereas earlier work focused on receipt of health insurance as a fringe benefit, we focused our analysis more directly on access to care by examining both a broader measure of health insurance coverage and an additional direct measure of access: reporting cost-related barriers to receiving needed medical care. Finally, we included more comprehensive sets of individual and state-level covariates in addition to state and regional fixed effects and time trends.Using 12 years of data from the Behavioral Risk Factor Surveillance System (BRFSS)²² and several additional sources, we examined associations between state-level minimum wage policies and respondent-level indicators of access to health care. Given the competing hypotheses about the potential effects of minimum wage policy, this analysis provides unique empirical evidence on an important policy whose theoretical effects have been hotly contested.