HOW WELL DO WE MEASURE EMPLOYER-PROVIDED HEALTH-INSURANCE COVERAGE

Using data from the Current Population Survey and a new matched survey of employers and employees, this paper investigates error in the meas urement of employer-provided health insurance. The often-used March CP S gives lower coverage estimates than the April/May CPS, which focuses on employer-provided coverage. In addition, individuals who are in bo th the March CPS and April/May CPS often give inconsistent responses o n their health insurance status, perhaps due to differences in the wor ding of the health insurance questions. A new survey shows that worker s tend to report higher rates of coverage than do firms and that many individuals also disagree with their employers about their coverage. T he differences in the firm and worker reports of coverage are uncorrel ated with standard worker and firm characteristics, suggesting classic al measurement error that does not bins the parameters of models expla ining health coverage. When health insurance is used as an explanatory variable, however, measurement error results in significant bias towa rd zero.