Our stylized model generates several empirical hypotheses about the insurance offer decision. Firms in industries where labor turnover rates are high do not tend to offer insurance. Premium rigidities will be most pronounced in such industries. Firms not offering insurance will tend to have lower health-cost variability and lower average expected health spending than firms offering insurance; for example, they have higher proportions of younger workers or are in industries where workers tend to be healthy. These firms need not have high within-firm variability of employee health costs as proposed by Bundorf (2002). Industries or markets with greater between-firm age and average employee income heterogeneity (rather than.
