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Health Insurance Benefit Mandates and the Firm-Size Distribution

James Bailey () and Douglas Webber

No 9292, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: By 2010, the average US state had passed 37 health insurance benefit mandates (laws requiring health insurance plans to cover certain additional services). Previous work has shown that these mandates likely increase health insurance premiums, which in turn could make it more costly for firms to compensate employees. Using 1996–2010 data from the Quarterly Census of Employment and Wages and a novel instrumental variables strategy, we show that there is limited evidence that mandates reduce employment. However, we find that mandates lead to a distortion in firm size, benefiting larger firms that are able to self-insure and thus exempt themselves from these state-level health insurance regulations. This distortion in firm size away from small businesses may lead to substantial decreases in productivity and economic growth.

Keywords: employment; interest groups; self-insurance; benefit mandates; health insurance; firm size (search for similar items in EconPapers)
JEL-codes: L51 I13 I18 J32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-hea, nep-ias and nep-lab
Date: 2015-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Published in: Journal of Risk and Insurance, 2018, 85 (2), 577-595

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