The Employment & Distributional Effects of Mandated Benefits

  • Title:

    The Employment & Distributional Effects of Mandated Benefits
  • Paperback ISBN:

    0-8447-7021-3
  • Paperback Dimensions:

    5.5'' x 8.5''
  • 35 Paperback pages
  • Buy the Book

Free health benefits like free lunches are wishful thinking. There is no way to extend health insurance coverage to millions of people without paying for it. The employer mandate put forth in the Clinton health plan seems a poor way to pay the health bill. True, it would guarantee insurance to 18 million workers who now lack it. But this insurance will not be a gift, as the workers themselves will be compelled to pay for it through lower wages, and where wage rollbacks are infeasible, through reductions in employment.

The employer subsidies added to the Clinton mandate would reduce the share of the bill paid through the employer, and therefore they would ameliorate job loss and wage rollbacks. But the subsidies are not enough to eliminate job loss and wage rollbacks, which remain significant. The subsidies also come at a price. In addition to increasing budget expenditures by $40 billion, the subsidy scheme generates inefficient reorganization of business, creating peculiar incentives to form small firms and to segregate high-skill and low-skill workers. These market distortions would not be present if increased health coverage were provided to low-income families through direct subsidies rather than through an employer mandate.

This study draws on material in June E. O'Neill and Dave M. O'Neill, The Impact of a Health Insurance Mandate on Labor Costs and Employment: Empirical Evidence (Employment Policies Institute, 1993).

Also Visit
AEIdeas Blog The American Magazine

What's new on AEI

Study: Piketty tax plan would boost equality by making rich less rich. But poor would be poorer, too
image Rep. McCaul’s cybersecurity information sharing center: If you build it, will they come?
image Halbig and its aftermath
image Culture of how Washington pays for medical care
AEI on Facebook
Events Calendar
  • 28
    MON
  • 29
    TUE
  • 30
    WED
  • 31
    THU
  • 01
    FRI
Tuesday, July 29, 2014 | 10:00 a.m. – 12:00 p.m.
Is Medicare's future secure? The 2014 Trustees Report

Please join AEI as the chief actuary for Medicare summarizes the report’s results, followed by a panel discussion of what those spending trends are likely to mean for seniors, taxpayers, the health industry, and federal policy.

Event Registration is Closed
Friday, August 01, 2014 | 10:30 a.m. – 12:00 p.m.
Watergate revisited: The reforms and the reality, 40 years later

Please join us as four of Washington’s most distinguished political observers will revisit the Watergate hearings and discuss reforms that followed.

No events scheduled this day.
No events scheduled this day.
No events scheduled today.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.