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Mandate-based health reform and the labor market: Evidence from the Massachusetts reform

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  • Kolstad, Jonathan T.
  • Kowalski, Amanda E.

Abstract

We model the labor market impact of the key provisions of the national and Massachusetts “mandate-based” health reforms: individual mandates, employer mandates, and subsidies. We characterize the compensating differential for employer-sponsored health insurance (ESHI) and the welfare impact of reform in terms of “sufficient statistics.” We compare welfare under mandate-based reform to welfare in a counterfactual world where individuals do not value ESHI. Relying on the Massachusetts reform, we find that jobs with ESHI pay $2812 less annually, somewhat less than the cost of ESHI to employers. Accordingly, the deadweight loss of mandate-based health reform was approximately 8 percent of its potential size.

Suggested Citation

  • Kolstad, Jonathan T. & Kowalski, Amanda E., 2016. "Mandate-based health reform and the labor market: Evidence from the Massachusetts reform," Journal of Health Economics, Elsevier, vol. 47(C), pages 81-106.
  • Handle: RePEc:eee:jhecon:v:47:y:2016:i:c:p:81-106
    DOI: 10.1016/j.jhealeco.2016.01.010
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    More about this item

    Keywords

    Affordable Care Act; Massachusetts health reform; Welfare effects; Labor market; Individual mandate;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I1 - Health, Education, and Welfare - - Health
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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