Job loss due to health insurance mandates
J. A. Klerman and D. P. Goldman
RAND, Santa Monica, CA 90407-2138.
The proposed Health Security Act provides universal health insurance by
extending the current employer-based health insurance financing system. It
requires employers to pay approximately 80% of the health insurance premium
for each of their workers. Experience with other legislation requiring
employers to provide benefits to their employees indicates that most of the
cost of a mandated benefit is shifted to employees in the form of lower
wages. However, for workers without health insurance and with earnings
close to the minimum wage, minimum-wage legislation prohibits employers
from lowering wages in response to a health insurance mandate. These
employers can be expected to respond by cutting employment. Recent evidence
from employer reactions to increases in the minimum wage suggests that
approximately 100,000 jobs would be lost due to the Health Security Act's
employer mandate.