Is Employer-Mandated Health Care Bad for Workers?

By Deb Perelman  |  Posted 2007-02-26 Print this article Print

What American worker wouldn't support a law that required each and every employer to provide health care for employees? Not many, most would argue; health care is painfully expensive without employers' co-payments, and sometimes even with them. Yet, a study released Feb. 26 by two Harvard economists at the Employment Policies Institute might have people thinking again about how they would like the government to go about this.

The study found that although a national mandate for businesses to provide health insurance to their employees would increase the number of insured workers by 8.2 million, it could result in almost 1 million (995,000) lost jobs, and decrease aggregate wages by $71 billion.

The study instead found a preference for Medicaid expansion, which could actually increase employment as well as the number of insured. Extending Medicaid coverage up to 300 percent 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; cost $16.4 billion in public funds; and result in a $16.5 billion increase in aggregate wages.

The study found tax credits of $1,000 per adult and $500 per child with a $3,000 maximum per family to be the least effective. This option would result in 1.6 million newly insured people at a cost of $12,644 per person and $19.8 billion in public funds, thus carrying a high price tag without significantly affecting the number of insured.

"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 health care." |

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