Employment separation and health insurance coverage

We study the interrelationship between employment separation and insurance coverage. We first document that employment separation is associated with large reductions in insurance coverage, even conditioning on underlying tastes for insurance. We then show that reducing the cost of insurance through state laws mandating continued access to employer-provided health insurance for the non-employed increases the likelihood of having insurance after separating from a job by 6.7%. These mandates also increase the number of individuals who separate and the total amount of time spent jobless. Finally, at least some of this increased non-employment appears to be spent in productive job search as the availability of continuation coverage is related to significant wage gains among those who separate from their jobs. (C) 1997 Elsevier Science S.A.