NCPA - National Center for Policy Analysis


November 13, 2007

Laws that require employers to provide health insurance to employees will cause one in 10 of those workers to lose their jobs, according to a report on health care reform.

The Employment Policies Institute, which sponsored research by two Cornell University economists, has released a report that's sour on the concept of "pay or play" employer mandates, calling them "blunt instruments" to fund health insurance for the working poor:

  • Such laws, proposed in at least a dozen states, would require certain employers to provide health insurance to their employees or pay a fine.
  • Those laws may sound like a good idea to ensure low-wage workers get health insurance in jobs that don't usually provide it, but Cornell researchers Richard Burkhauser and Kosali Simon discount that idea.

The sponsoring think tank agrees with their conclusions: "The cost of providing health insurance is so great that most businesses covered by 'pay or play' laws will be forced to cut back on hours and jobs just to stay afloat," said Employment Policies Institute chief economist Jill Jenkins.

  • Based on a Towers Perrin estimate that the average per-employee cost for an employer to provide health insurance in 2008 will be $7,272 a year, the report says that some employers would lose money if forced to provide health insurance.
  • The report contends that many members of the "working poor" earn too much to qualify for and benefit from proposed laws that would mandate employer-sponsored coverage.
  • Many other low-wage workers would get no benefit because they would no longer have a job, the researchers said.

Source: Diane Stafford, "Workers would lose jobs under mandatory health-insurance laws, report says," Kansas City Star, November 13, 2007; and Richard Burkhauser and Kosali Simon, "Health Care Reform: The Economics of "Pay or Play" Employer Mandates," Cornell University/Employment Policies Institute, November 7, 2007.

For the Employment Policies Institute report: 


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