Mandated Health Insurance Could Cost Workers Plenty

Although most Americans are covered by employer-sponsored medical insurance, two-thirds of the 33 million uninsured people under age 65 are members of families headed by full-time workers whose employers (mostly small businesses) offer no such coverage. Thus, one popular scheme to solve the problem is to require all employers to provide basic health insurance. In a recent study, economists Jonathan Gruber of Harvard University and Alan Krueger of Princeton University calculate how such a requirement might affect wages of currently uninsured workers.

The study uses the impact of state workers' compensation programs on local wage levels as a proxy for the effect of mandated health insurance. Employers' workers' comp costs vary widely from state to state, depending on benefit levels that for specific injuries can run as much as six times higher in some states than in others. By comparing that variation in costs with state wage levels, the researchers are able to estimate the extent to which such costs are passed on to workers via lower wages.

In general, Gruber and Krueger find that some 85% of the costs of workers' compensation are shifted to workers via lower pay. Considering the high cost of health insurance and the low wages earned by most uninsured workers, such an impact on their wages would be quite severe. And while workers earning close to the minimum wage would be protected from wage cuts, the study notes that more than 80% of uninsured workers earn more than the minimum.

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