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http://ssrn.com/abstract=1402459
 
 

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The Effect of an Employer Health Insurance Mandate on Health Insurance Coverage and the Demand for Labor: Evidence from Hawaii


Tom Buchmueller


University of Michigan - Stephen M. Ross School of Business

John E. DiNardo


University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; National Bureau of Economic Research (NBER)

Robert G. Valletta


Federal Reserve Bank of San Francisco; Institute for the Study of Labor (IZA)


IZA Discussion Paper No. 4152

Abstract:     
Over the past few decades, policy makers have considered employer mandates as a strategy for stemming the tide of declining health insurance coverage. In this paper we examine the long term effects of the only employer health insurance mandate that has ever been enforced in the United States, Hawaii's Prepaid Health Care Act, using a standard supply-demand framework and Current Population Survey data covering the years 1979 to 2005. During this period, the coverage gap between Hawaii and other states increased, as did real health insurance costs, implying a rising burden of the mandate on Hawaii's employers. We use a variant of the traditional permutation (placebo) test across all states to examine the magnitude and statistical properties of these growing coverage differences and their impacts on labor market outcomes, conditional on an extensive set of covariates. As expected, the coverage gap is larger for workers who tend to have low rates of coverage in the voluntary market (primarily those with lower skills). We also find that relative wages fell in Hawaii over time, but the estimates are statistically insignificant. By contrast, a parallel analysis of workers employed fewer than 20 hours per week indicates that the law significantly increased employers' reliance on such workers in order to reduce the burden of the mandate. We find no evidence suggesting that the law reduced employment probabilities.

Number of Pages in PDF File: 68

Keywords: health insurance, employment, hours, wages

JEL Classification: J32, I18, J23

working papers series


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Date posted: May 13, 2009  

Suggested Citation

Buchmueller, Tom and DiNardo, John E. and Valletta, Robert G., The Effect of an Employer Health Insurance Mandate on Health Insurance Coverage and the Demand for Labor: Evidence from Hawaii. IZA Discussion Paper No. 4152. Available at SSRN: http://ssrn.com/abstract=1402459

Contact Information

Tom Buchmueller (Contact Author)
University of Michigan - Stephen M. Ross School of Business ( email )
701 Tappan Street
Ann Arbor, MI MI 48109
United States
John DiNardo
University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy ( email )
5238 Weill Hall
735 S. State St.
Ann Arbor, MI 48109-1220
734-647-7843 (Phone)
HOME PAGE: http://www-personal.umich.edu/~jdinardo/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Robert G. Valletta
Federal Reserve Bank of San Francisco ( email )
101 Market Street
San Francisco, CA 94105
United States
415-974-3345 (Phone)
415-977-4084 (Fax)
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
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