New Study Reveals Devastating Consequences of Employer-Mandated Healthcare

  • Publication Date: February 2007

  • Topics: Health Care

Washington, DC – A study released today by the Employment Policies Institute [EPI] reveals that a national mandate on businesses to provide health insurance to their employees would result in almost a million (995,000) lost jobs.

The study, by Harvard economists Drs. Ellen Meara and Meredith Rosenthal,* also found that, unlike an employer mandate, Medicaid expansion would actually increase employment as well as significantly increase the number of insured. Tax credits are by far the least effective of the three options analyzed and would carry a high price tag without significantly reducing the number of uninsured. The following are more results from the study:

Employer Mandate
A national mandate that would require businesses to provide health coverage would:
• Increase the number of insured employees by 8.2 million;
• Result in almost a million (995,000) lost jobs and shift 1.6 million employees from full-time to part-time employment; and
• Decrease aggregate wages by $71 billion.

Medicaid Expansion
Extending Medicaid coverage up to 300% of the poverty line would:
• Increase the number of insured by 5 million adults, including over half a million (591,000) children;
• Result in an increase in employment as well as shift 57,000 employees from part-time to full-time employment; and
• Cost $16.4 billion in public funds and result in a $16.5 billion increase in aggregate wages.

Tax Credit
A tax credit of $1,000 per adult and $500 per child with a maximum of $3,000 per family would:
• Result in only 1.6 million newly insured at a cost of $12,644 per person;
• Be available to over 54.5 million people; and
• Cost $19.8 billion in public funds.

“The sizable job losses and hour reductions that accompany employer mandates should give legislators pause,” said Jill Jenkins, EPI’s chief economist. “Increasing the number of insured in this country requires more, not less, money in people’s pockets. Rather than arguing about who should pay for insurance, policymakers should start arguing about how to lower the cost of healthcare.”

* Ellen Meara and Meredith Rosenthal are health economists with Ph.D.s from Harvard University. Both are Assistant Professors of Health Economics in Harvard Medical School’s Department of Health Care Policy. Meara is a faculty research fellow at the National Bureau of Economic Research and Rosenthal is an expert in trends in the health insurance market and consumer-directed health plans.

Click here to read a copy of the study “Comparing the Effects of Health Insurance Reform Proposals: Employer Mandates, Medicaid Expansion, and Tax Credits”.