How Does Health Insurance Affect Man Power Supply

Health Insurance refers to a financing system which covers an individual’s medical expenses by means of contributing to a common fund to pay for all or part of health services stipulated in an insurance policy. A health insurance helps protect you from unanticipated medical costs and provide you access to preventive care including vaccinations, consultations and screening. 

Recognizing the importance of medical insurance in ensuring the welfare of laborers, the Dubai government has made it mandatory for companies to provide insurance to their workers. The introduction of compulsory health insurances is sure to have ushered in a range of effects on the labor market. Let us look into some trends produced by the health insurances upon manpower supply in particular:

• Spousal coverage and labor supply of secondary earners

The extension of the insurance to the insurer’s spouse is called a spousal coverage. It has been found that spousal coverage has a negative impact on the labor supply, specifically of secondary earners. Secondary earners are those who contribute less than fifty percent for the family’s total earned income. Spousal coverage creates a decline in the labor supply of secondary earners in terms of employment likelihood, probability of working full time and work hours. 

• Dependent coverage and labor supply of young adults

Dependents or young adults who get access to health insurance coverage via their parent’s employer have a mixed influence upon the labor supply of young adults. Although the probability of workforce participation remains unaffected, the likelihood of working full time has been reduced considerably.

• Health insurance and labor supply of people with medical impairments

Labor force participation of people with health impairments appears to reduce if the insurances are not linked to employment. But employment-linked health insurance has a positive impact on their labor supply as it motivates them to stay in employment to avoid coverage loss in the face of future medical expenses.

• Health insurance and labor supply of public assistance recipients

Public assistance recipients are those who are low-income adults with dependents (for eg: single mothers). The labor supply effect of health insurance on this cohort appears to be ambiguous, with several studies indicating a negative effect while others showing a positive influence. It is interesting to note that different groups of low-income public assistance groups react differently to health insurance. It tends to be a disincentive to work for less educated adults and low income, and childless adults. 

• Labor supply effects of universal health coverage

With countries aiming to achieve universal health coverage, it is important to look at how it reflects upon the labor supply. Studies show that while universal health coverage engenders mixed and inconclusive links between health insurance and labor supply, it has been found that insurance programs aimed at formal employees draw a positive effect in terms of drawing working age household members into the labor market.

The labor market effect of health insurance, in terms of supply, has varying implications. Identifying these trends can help prevent labor shortage and unemployment. Employers must keep an eye out for the newest trends taking over the market. Health insurance can be a strong incentivizing factor to accomplish the same. Not only does health insurance maintain the labor supply, it is also part of creating a healthy workforce. 

World Star Manpower Supply company is a certified manpower supplier in the UAE, delivering human resources across the country. They are leaders in the industry, committed to solving the manpower shortage and challenges faced by organizations. Their uninterrupted service since its inception in 2008 has garnered widespread recognition and made them the most reliable source of manpower.