The descriptive evidence summarized in the previous sections presents a strong circumstantial
case supporting the hypothesis that public assistance alters the terms of trade
between private health insurance and publicly provided health insurance. More precisely,
I have shown that health insurance coverage rates did not decline among immigrants who
potentially suffered the largest welfare cutbacks in the post-1996 period (i.e., non-citizens
living in less generous states). Instead, this group experienced an offsetting increase in
employer-sponsored insurance. I now examine the nature of this tradeoff. Consider the
regression model: