Mandated Health Insurance in Massachusetts Comes Out of Employee Wages
An NBER Working Paper estimates that people who gained employer-supplied health insurance as a result of the Massachusetts mandate saw their wages fall by $6,055 per year, an amount only “slightly smaller in magnitude than the average cost of [employer supplied health insurance] to employers.”
Was it worth it? The authors estimate that workers value the coverage at only about 76 cents for every $1.00 their employer was required to spend. This implies that employees are worse off by more than $1,500 per year, on the average.
This is supposed to be a surprise?
It’s still better than implementing a wage tax.
But don’t worry, we can expect Obamacare to be absolutely nothing like that.
Interesting… Thanks for posting this!
Mandated Health Insurance in Massachusetts Comes Out of Employee Wages
Of course it does! Do policymakers merely think that employers would just pay and extra, say, $5,000 per worker regardless of how productive each worker is? Labor economics posits that the employee health plan is a portion of total compensation — not manna from Heaven.
Some interesting points:
“Individuals who receive ESHI receive wages that are lower by approximately the amount their employer spends on ESHI” – makes sense
“We fi nd that mandate-based reform is a relatively ecient way to expand coverage…Our main estimate suggests that mandate-based coverage expansion in Massachusetts resulted in a deadweight loss due to distortion of the labor market that was only 5% of the distortion associated with instead providing health insurance through a tax on wages.” – Good, but ACA is so much more than a mandate.
Yes, isn’t it interesting that the only two possibilities considered are a mandate or a wage tax.
Now, if they would please explain why a tax on wages expands coverage…