Employer Health Insurance Mandates and the Risk of Unemployment

Employer health insurance mandates form the basis of many health care reform proposals. Proponents make the case that they will increase insurance, while opponents raise the concern that low-wage workers will see offsetting reductions in their wages and that in the presence of minimum wage laws some of the lowest wage workers will become unemployed. We construct an estimate of the number of workers whose wages are so close to the minimum wage that they cannot be lowered to absorb the cost of health insurance, using detailed data on wages, health insurance, and demographics from the Current Population Survey (CPS). We find that 33 percent of uninsured workers earn within $3 of the minimum wage, putting them at risk of unemployment if their employers were required to offer insurance. Assuming an elasticity of employment with respect to minimum wage increase of -0.10, we estimate that 0.2 percent of all full-time workers and 1.4 percent of uninsured full-time workers would lose their jobs because of a health insurance mandate. Workers who would lose their jobs are disproportionately likely to be high school dropouts, minority, and female. This risk of unemployment should be a crucial component in the evaluation of both the effectiveness and distributional implications of these policies relative to alternatives such as tax credits, Medicaid expansions, and individual mandates, and their broader effects on the well-being of low-wage workers.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/73099/1/j.1540-6296.2008.00133.x.pd

Medicaid, AFDC and family formation

This paper uses the fact that states joined the Medicaid programme at different times between early 1966 and early 1970 to estimate the effect of health insurance availability on childbearing and marital choice. Data on women aged 15 to 45 during the 1964 to 1972 period from the March Current Population Survey (CPS) is used to estimate Medicaid's effect on the probability that a woman has recently given birth and is not married. It is found that the introduction of Medicaid led to a small but statistically significant increase in the probability that a woman is single and has recently given birth. Specifically, the introduction of Medicaid led to a 0.3 percentage point increase in the probability that a woman is a single mother of young children. This is an approximately 10% increase relative to the average fraction of single mothers in the sample of about 3%. Although nonwhite women are on average more likely to be single mothers than white women are, it is found that Medicaid did not significantly contribute to the formation of nonwhite female-headed families. In contrast, Medicaid led to an approximately 14% increase in the probability that a white woman is a single mother.