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Author: Hamilton, Darrick ; Darrity, William ; Goldsmith, Arthur
Working Paper : Racial and Ethnic Composition of Firms and Disparities in Firm Provisions of Health Insurance Coverage (PDF) ; March 2005

It is well documented that black, Latino and immigrant groups are less likely to be insured than whites even after accounting for a wide range of factors.*  Part of these insurance discrepancies can be explained by the socioeconomic positioning of these groups, such as the under-representation of certain groups within the higher insured managerial and professional occupations. However, even within occupational categories, the uninsurance rates for blacks, Latinos and immigrants exceed that of their white and native-born peers, suggesting that actions across firms may be a source of their low insurance coverage rates. Using data drawn from the employer sample of the Multi-City Study of Urban Inequality (MCSUI), this study offers and finds evidence in support of a new explanation for this disparity, namely that firms with predominantly black and/or Latino workforces (black and Latino firms) are less likely to offer health insurance than comparable firms with predominantly white workforces (white firms).

There are a myriad of explanations why comparable black and Latino firms offer less coverage than white firms. Among the possible explanations are (1) higher premiums faced by firms to cover workers from non-white groups, (2) lower profitability of these non-white firms, (3) lower collective bargaining power to negotiate health insurance coverage for workers at firms that employ relatively more black and Latino employees, (4) lower demand for coverage from predominantly black and Latino workforces, and, lastly, (5) workers employed at firms with large shares of non-white workers may be more susceptible to labor market discrimination and as a result be offered less insurance coverage. In addition to determining that non-white firms are less likely to offer coverage than comparable white firms, this study discusses the plausibility of the five explanations listed above for the relative under-coverage of non-white firms .

* See Crow, Harrington, and McLaughlin (2002) for a survey of what is known about the link between race, ethnicity, immigrant status and insurance coverage. They report that the uninsurance rate is 9.38 for whites, 17.47 percent for blacks, 22.10 percent for Latinos, and 31.64 percent for immigrants.