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http://ssrn.com/abstract=1024132
 
 

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Employer Health Insurance Mandates and the Risk of Unemployment


Katherine Baicker


Harvard University - Department of Health Policy & Management; National Bureau of Economic Research (NBER)

Helen Levy


University of Michigan at Ann Arbor - Institute for Social Research (ISR); National Bureau of Economic Research (NBER)

October 2007

NBER Working Paper No. w13528

Abstract:     
Employer health insurance mandates form the basis of many health care reform proposals. Proponents make the case that they will increase insurance, while opponents raise the concern that low-wage workers will see offsetting reductions in their wages and that in the presence of minimum wage laws some of the lowest wage workers will become unemployed. We construct an estimate of the number of workers whose wages are so close to the minimum wage that they cannot be lowered to absorb the cost of health insurance, using detailed data on wages, health insurance, and demographics from the Current Population Survey. We find that 33 percent of uninsured workers earn within $3 of the minimum wage, putting them at risk of unemployment if their employers were required to offer insurance. Assuming an elasticity of employment with respect to minimum wage increase of -0.10, we estimate that 0.2 percent of all full-time workers and 1.4 percent of uninsured full-time workers would lose their jobs because of a health insurance mandate. Workers who would lose their jobs are disproportionately likely to be high school dropouts, minority, and female. This risk of unemployment should be a crucial component in the evaluation of both the effectiveness and distributional implications of these policies relative to alternatives such as tax credits, Medicaid expansions, and individual mandates, and their broader effects on the well-being of low-wage workers.

Number of Pages in PDF File: 33

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Date posted: October 24, 2007  

Suggested Citation

Baicker, Katherine and Levy, Helen, Employer Health Insurance Mandates and the Risk of Unemployment (October 2007). NBER Working Paper No. w13528. Available at SSRN: http://ssrn.com/abstract=1024132

Contact Information

Katherine Baicker (Contact Author)
Harvard University - Department of Health Policy & Management ( email )
677 Huntington Avenue
Boston, MA 02115
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Helen Levy
University of Michigan at Ann Arbor - Institute for Social Research (ISR) ( email )
Ann Arbor, MI 48106-1248
United States
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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