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State Mandated Benefits and Employer Provided Health Insurance

  • Jonathan Gruber

One popular explanation for this low rate of employee coverage is the presence of numerous state regulations which mandate that group health insurance plans must include certain benefits. By raising the minimum costs of providing any health insurance coverage, these mandated benefits make it impossible for firms which would have desired to offer minimal health insurance at a low cost to do so. I use data on insurance coverage among employees in small firms to investigate whether this problem is an important cause of employee non-insurance. I find that mandates have little effect on the rate of insurance coverage; this finding is robust to a variety of specifications of the regulations. I also find that this lack of an effect may be because mandates are not binding, since most firms appear to offer these benefits even in the absence of regulation.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4239.

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Date of creation: Dec 1992
Date of revision:
Publication status: published as Journal of Public Economics, November 1994.
Handle: RePEc:nbr:nberwo:4239
Note: HC PE
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  1. Feldstein, Martin S, 1973. "The Welfare Loss of Excess Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 251-80, Part I, M.
  2. Jonathan Gruber, 1992. "The Efficiency of a Group-Specific Mandated Benefit: Evidence From Health Insurance Benefits for Maternity," NBER Working Papers 4157, National Bureau of Economic Research, Inc.
  3. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
  4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  5. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-77, June.
  6. Summers, Lawrence H, 1989. "Some Simple Economics of Mandated Benefits," American Economic Review, American Economic Association, vol. 79(2), pages 177-83, May.
  7. Coate, Stephen, 1995. "Altruism, the Samaritan's Dilemma, and Government Transfer Policy," American Economic Review, American Economic Association, vol. 85(1), pages 46-57, March.
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