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Health Insurance Benefit Mandates and Firm Size Distribution

Author

Listed:
  • James Bailey
  • Douglas Webber

Abstract

By 2010, the average U.S. state had passed 37 health insurance benefit mandates (laws requiring health insurance plans to cover certain additional services). Previous work has shown that these mandates likely increase health insurance premiums, which in turn could make it more costly for firms to compensate employees. Using 1996–2010 data from the Quarterly Census of Employment and Wages and a novel instrumental variables strategy, we show that there is limited evidence that mandates reduce employment. However, we find that mandates lead to a distortion in firm size, benefiting larger firms that are able to self†insure and thus exempt themselves from these state†level health insurance regulations. This distortion in firm size away from small businesses may lead to substantial decreases in productivity and economic growth.

Suggested Citation

  • James Bailey & Douglas Webber, 2018. "Health Insurance Benefit Mandates and Firm Size Distribution," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 85(2), pages 577-595, June.
    • Handle: RePEc:bla:jrinsu:v:85:y:2018:i:2:p:577-595
    DOI: 10.1111/jori.12164
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    Cited by:

    1. Antwi, Yaa Akosa & Maclean, J. Catherine, 2017. "State Health Insurance Mandates and Labor Market Outcomes: New Evidence on Old Questions," IZA Discussion Papers 10578, Institute of Labor Economics (IZA).
    2. Li, Xiaoxue & Ye, Jinqi, 2017. "The spillover effects of health insurance benefit mandates on public insurance coverage: Evidence from veterans," Journal of Health Economics, Elsevier, vol. 55(C), pages 45-60.
    3. James Bailey, 2022. "State Health Insurance Benefit Mandates and Health Care Affordability," JRFM, MDPI, vol. 15(2), pages 1-10, February.

    More about this item

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

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