Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform

Authors

Jonathan T. Kolstad, University of Pennsylvania
Amanda E. Kowalski, Yale University

Publication Date

1-27-2015

Series

Upjohn Institute working paper ; 15-219

DOI

10.17848/wp15-219

Abstract

We model the labor market impact of the key provisions of the national and Massachusetts "mandate-based" health reforms: individual mandates, employer mandates, and subsidies. We characterize the compensating differential for employer-sponsored health insurance (ESHI) and the welfare impact of reform in terms of "sufficient statistics." We compare welfare under mandate-based reform to welfare in a counterfactual world where individuals do not value ESHI. Relying on the Massachusetts reform, we find that jobs with ESHI pay $2,812 less annually, somewhat less than the cost of ESHI to employers. Accordingly, the deadweight loss of mandate-based health reform was approximately 8 percent of its potential size.

Issue Date

July 28, 2014

Sponsorship

W.E. Upjohn Institute for Employment Research Early Career Research Award 12-137-07

Subject Areas

LABOR MARKET ISSUES; Wages, health insurance and other benefits; Health insurance