The US does not have universal healthcare coverage for all its citizens. Instead, institutions have been cobbled together, with coverage varying from person to person. Some forms of health insurance are part of the compensation for employment, while others can be accessed whether the person is employed or not. Employers and the government provide most people their health insurance. The Affordable Care Act has mandated all employers with at least 50 full time employees to cover the health insurance of at least 95 percent of the employees. This coverage is borne as a cost by the employer. My thesis uses longitudinal data from the March Current Population Survey (CPS) conducted by the Census for the Bureau of Labor Statistics (which includes individual-level responses to many demographic and socioeconomic questions) to estimate the impact of insurance cost by observing two sets of time periods (before the mandate is imposed and after the mandate is imposed) to study what has been the impact on variables such as wages, for people who are the heads of their households and what the variation is based on (such as race, age, level of education, and marital status).

We analyze the effect of employer-sponsored health insurance premiums on employment and annual wages in the US using a county-level panel dataset for the period 2005-2010. Using variation in medical malpractice payments and variation in medical malpractice legislation over time and within states as the source of identifying variation in the health insurance premiums, we estimate the causal effects of rising health insurance premiums on employment and annual wages. We find that a 10% increase in premiums reduces employment by 1.1 percentage points, and leads to a statistically insignificant reduction of annual wages. Since US counties are characterized by a varying degree of private health insurance coverage, we also test whether the private health insurance coverage is a moderating variable for the relationship between the health insurance premiums and the labor market outcomes analyzed in this study. We find that rising premiums negatively affect the labor market conditions faced by US workers, especially in areas that are characterized by high private health insurance coverage.

In this study we re-visit the relationship between private health insurance mandates, access to employer-sponsored health insurance, and labor market outcomes. Specifically, we model employer-sponsored health insurance access and labor market outcomes across the lifecycle as a function of the number of high cost mandates in place at labor market entrance. Our analysis draws on a long panel of workers from the National Longitudinal Survey of Youth 1979 and exploits variation in five high cost state mandates between 1972 and 1989. Four principal findings emerge from our analysis. First, we find no strong evidence that high cost state health insurance mandates discourage employers from offering insurance to employees. Second, employers adjust both wages and labor demand to offset mandate costs, suggesting that employees place some value on the mandated benefits. Third, the effects are persistent, but not permanent. Fourth, the effects are heterogeneous across worker types. These findings have implications for thinking through the full labor market effects of health insurance expansions.

Who really pays for health benefits? An accessible explanation of the economic theory behind this question

A distinctive feature of the health insurance market in the U.S. is the restriction of group insurance availability to the workplace. This has a number of important implications for the functioning of the labor market, through mobility from job-to-job or in and out of the labor force, wage determination, and hiring decisions. This paper reviews the large literature that has emerged in recent years to assess the impact of health insurance on the labor market. I begin with an overview of the institutional details relevant to assessing the interaction of health insurance and the labor market. I then present a theoretical overview of the effects of health insurance on mobility and wage/employment determination. I critically review the empirical literature on these topics, focusing in particular on the methodological issues that have been raised, and highlighting the unanswered questions which can be the focus of future work in this area.

Second, small firms that offer health insurance may attempt to avoid expensive premium variability by maintaining a work force with low expected health costs. Using the NMES, I find small firms that offer health insurance are less like to hire and more likely to layoff workers with families that have medical conditions that lead to higher health insurance premiums. These results suggest that the link between small firm health insurance and employment leads to employment distortions.

This study, based mainly on the 1989-98 March Current Population surveys, finds that state-mandated health insurance benefits and small-group health insurance reform had no statistically significant effects on labor market outcomes such as the quantity of work, wages, and whether an employee worked for a small or large firm. The number and type of state-mandated health insurance benefits were unrelated to weeks of work, wages, and the prevalence of private insurance coverage, but positively associated with weekly work hours. Extensive small-group health insurance reform was associated with a slight decline in the prevalence of private insurance coverage in small firms, and this reform affected both full- and part-time employees. Less extensive reforms were not generally related to the prevalence of private insurance coverage. Overall, the authors do not find strong evidence that insurance regulations affected labor market outcomes, although they appear to cause a small decrease in private coverage.