Employer-sponsored health insurance is a significant component of labor costs. We examine how insurance premiums causally affect worker outcomes across the income distribution. For identification, we instrument premiums using idiosyncratic variation in insurers' recent losses. Analyzing US administrative data, we find that higher premiums adversely affect low-income workers but not high-income workers. Following premium increases, low-income workers face higher rates of job separation, unemployment, large earnings losses, and transitions to staffing arrangements, as well as lower wage growth even when retained. In contrast, high-income workers experience minimal adverse effects and even benefit on some dimensions.
