Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform

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Kolstad, Jonathan T.; Kowalski, Amanda E.
W.E. Upjohn Institute for Employment Research
Affordable Care Act; ACA; Massachusetts health reform; welfare effects; health insurance; health care reform; health benefits; health insurance mandate; employer provided benefits; Massachusetts; LABOR MARKET ISSUES; Wages, health insurance and other benefits; Health insurance; Economics; Health Economics; Social and Behavioral Sciences
report description
We model the labor market impact of the key provisions of the national and Massachusetts "mandate-based" health reforms: individual mandates, employer mandates, and subsidies. We characterize the compensating differential for employer-sponsored health insurance (ESHI) and the welfare impact of reform in terms of "sufficient statistics." We compare welfare under mandate-based reform to welfare in a counterfactual world where individuals do not value ESHI. Relying on the Massachusetts reform, we find that jobs with ESHI pay $2,812 less annually, somewhat less than the cost of ESHI to employers. Accordingly, the deadweight loss of mandate-based health reform was approximately 8 percent of its potential size.