Employer Health Insurance Mandates and the Risk of Unemployment
33 Pages Posted: 24 Oct 2007 Last revised: 19 Dec 2022
Date Written: October 2007
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.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature
-
Recent Trends in Employer-Sponsored Health Insurance Coverage: are Bad Jobs Getting Worse?
By Henry S. Farber and Helen Levy
-
Tax Incentives and the Decision to Purchase Health Insurance: Evidence from the Self-Employed
By Jonathan Gruber and James M. Poterba
-
Employment-Based Health Insurance and Job Mobility: Is There Evidence of Job-Lock?
-
Subsidies to Employee Health Insurance Premiums and the Health Insurance Market
-
How Elastic is the Firm's Demand for Health Insurance?
By Jonathan Gruber and Michael Lettau
-
Limited Insurance Portability and Job Mobility: The Effects of Public Policy on Job-Lock
-
Health Insurance and Early Retirement: Evidence from the Availability of Continuation Coverage
-
Why Did Employee Health Insurance Contributions Rise?
By Jonathan Gruber and Robin Mcknight