August 17, 1994

Job Loss due to Health Insurance Mandates

Author Affiliations

From RAND, Santa Monica, Calif.

JAMA. 1994;272(7):552-556. doi:10.1001/jama.1994.03520070072041

The proposed Health Security Act provides universal health insurance by extending the current employer-based health insurance financing system. It requires employers to pay approximately 80% of the health insurance premium for each of their workers. Experience with other legislation requiring employers to provide benefits to their employees indicates that most of the cost of a mandated benefit is shifted to employees in the form of lower wages. However, for workers without health insurance and with earnings close to the minimum wage, minimum-wage legislation prohibits employers from lowering wages in response to a health insurance mandate. These employers can be expected to respond by cutting employment. Recent evidence from employer reactions to increases in the minimum wage suggests that approximately 100 000 jobs would be lost due to the Health Security Act's employer mandate.

(JAMA. 1994;272:552-556)