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

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Author Info

  • Buchmueller, Thomas C.

    ()
    (University of Michigan)

  • DiNardo, John

    ()
    (University of Michigan)

  • Valletta, Robert G.

    ()
    (Federal Reserve Bank of San Francisco)

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.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4152.

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Length: 68 pages
Date of creation: Apr 2009
Date of revision:
Publication status: published in: American Economic Journal: Economic Policy, 2011, 3 (4), 25-51
Handle: RePEc:iza:izadps:dp4152

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Keywords: hours; health insurance; employment; wages;

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References

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  1. Katherine Baicker & Helen Levy, 2008. "Employer Health Insurance Mandates and the Risk of Unemployment," Risk Management and Insurance Review, American Risk and Insurance Association, American Risk and Insurance Association, vol. 11(1), pages 109-132, 03.
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  5. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
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  19. Sang-Hyop Lee & Gerard Russo & Lawrence H. Nitz & Abdul Jabbar, 2005. "The Effect of Mandatory Employer-Sponsored Insurance (ESI) on Health Insurance Coverage and Labor Force Utilization in Hawaii: Evidence from the Current Population Survey (CPS) 1994-2004," Working Papers, University of Hawaii at Manoa, Department of Economics 200512, University of Hawaii at Manoa, Department of Economics.
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Citations

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Cited by:
  1. Rob Valletta & Leila Bengali, 2013. "What’s behind the increase in part-time work?," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, Federal Reserve Bank of San Francisco, issue aug26.
  2. Yaa Akosa Antwi & Asako S. Moriya & Kosali Simon, 2012. "Effects of Federal Policy to Insure Young Adults: Evidence from the 2010 Affordable Care Act Dependent Coverage Mandate," NBER Working Papers 18200, National Bureau of Economic Research, Inc.
  3. Colla Carrie H & Dow William H & Dube Arindrajit, 2011. "How Do Employers React to a Pay-or-Play Mandate? Early Evidence from San Francisco," Forum for Health Economics & Policy, De Gruyter, De Gruyter, vol. 14(2), pages 1-43, April.
  4. James Bailey, 2013. "Who Pays the High Health Costs of Older Workers? Evidence from Prostate Cancer Screening Mandates," DETU Working Papers, Department of Economics, Temple University 1302, Department of Economics, Temple University.
  5. Thomas C. Buchmueller & Alan C. Monheit, 2009. "Employer-Sponsored Health Insurance and the Promise of Health Insurance Reform," NBER Working Papers 14839, National Bureau of Economic Research, Inc.
  6. Bohn, Sarah & Lofstrom, Magnus & Raphael, Steven, 2011. "Did the 2007 Legal Arizona Workers Act Reduce the State's Unauthorized Immigrant Population?," IZA Discussion Papers 5682, Institute for the Study of Labor (IZA).
  7. Carrie H. Colla & William H. Dow & Arindrajit Dube, 2011. "The Labor Market Impact of Employer Health Benefit Mandates: Evidence from San Francisco’s Health Care Security Ordinance," NBER Working Papers 17198, National Bureau of Economic Research, Inc.
  8. Munasib, Abdul & Rickman, Dan S., 2014. "Regional Economic Impacts of the Shale Gas and Tight Oil Boom: A Synthetic Control Analysis," MPRA Paper 57681, University Library of Munich, Germany.

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