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The effect of state health insurance benefit mandates on premiums and employee contributions

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  • James Bailey
  • Nathan Blascak

Abstract

The average US state has 40 benefit mandates, laws requiring health insurance to cover particular conditions, treatments, providers or people. We investigate the extent to which these mandates increase the health insurance premiums paid by employers, and the extent to which these higher premiums are passed on to employees in the form of higher employee contributions. We use state-level data on premiums and employee contributions to health insurance from the insurance component of the 1996--2011 Medical Expenditure Panel Survey. Our main analysis is a fixed effects regression that controls for age, race, income, union membership and the presence of state mandate waivers. We find robust evidence that the average mandate increases premiums by approximately 0.6%, and that mandates lead to similar increases in employee contributions for single-coverage health insurance plans. Alternative specifications using an AR(1) error structure estimate a larger effect of mandates, while those using generalized estimating equations estimate smaller effects. We find that mandates requiring insurers to cover a specific benefit, as opposed to a specific type of provider or person, lead to the largest increases in employee contributions.

Suggested Citation

  • James Bailey & Nathan Blascak, 2016. "The effect of state health insurance benefit mandates on premiums and employee contributions," Applied Economics Letters, Taylor & Francis Journals, vol. 23(14), pages 1042-1046, September.
  • Handle: RePEc:taf:apeclt:v:23:y:2016:i:14:p:1042-1046
    DOI: 10.1080/13504851.2015.1130786
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    File URL: http://hdl.handle.net/10.1080/13504851.2015.1130786
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    References listed on IDEAS

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    1. Gruber, Jonathan & McKnight, Robin, 2003. "Why did employee health insurance contributions rise?," Journal of Health Economics, Elsevier, vol. 22(6), pages 1085-1104, November.
    2. Kowalski Amanda E. & Congdon William J. & Showalter Mark H., 2008. "State Health Insurance Regulations and the Price of High-Deductible Policies," Forum for Health Economics & Policy, De Gruyter, vol. 11(2), pages 1-26, November.
    3. Robert Kaestner & Kosali Ilayperuma Simon, 2002. "Labor Market Consequences of State Health Insurance Regulation," ILR Review, Cornell University, ILR School, vol. 56(1), pages 136-159, October.
    4. Bailey, James, 2013. "Who pays for obesity? Evidence from health insurance benefit mandates," Economics Letters, Elsevier, vol. 121(2), pages 287-289.
    5. Joanna N. Lahey, 2012. "The efficiency of a groupā€specific mandated benefit revisited: The effect of infertility mandates," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(1), pages 63-92, December.
    6. James Bailey, 2013. "The Effect of Health Insurance Benefit Mandates on Premiums," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 40(1), pages 119-127, December.
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    Cited by:

    1. Yaa Akosa Antwi & Johanna Catherine Maclean, 2017. "State Health Insurance Mandates and Labor Market Outcomes: New Evidence on Old Questions," NBER Working Papers 23203, National Bureau of Economic Research, Inc.
    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.

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