WASHINGTON – Laws that require employers to provide health insurance to employees are likely to reduce employment for low-wage workers, according to a study.
Small businesses will be faced with tough decisions due to state laws that require them to provide health insurance, said researchers from the Employment Policies Institute.
At least a dozen states – including California, Maine, Illinois and Minnesota – are considering so-called “play or pay” mandates to provide all employees with healthcare insurance. In addition, three Democratic presidential candidates – Hillary Clinton, Barack Obama and John Edwards – have included some variation of play or pay initiatives in their healthcare reform platforms.
Under these plans, employers either play – provide healthcare insurance coverage to employees – or pay –subsidies, typically a flat per-hour rate, to support governmental programs that provide insurance for those who don’t have health coverage.
The study estimates that for every 100 newly insured employees given insurance because of pay-or-pay mandates, 10 entry-level employees will lose their jobs, based on federal data from the Current Population Survey, a joint effort for data collection for the Bureau of Labor Statistics and the Census Bureau.
“Play or pay mandates … are a blunt instrument for funding health insurance for the working poor,” wrote Cornell University economists Richard Burkhauser and Kosali Simon, authors of the study. “The vast majority of those who benefit from play-or-pay mandates … live in families with incomes twice the poverty line or more.”
Such initiatives are ineffective in broadening healthcare coverage across the population, the authors contend.
“Depending on how coverage is determined, the mandate will leave a significant share of the working poor ineligible for such benefits, either because their hourly wage is too high or they work for smaller exempt firms,” they wrote.
Mandating health insurance coverage is of growing importance because the Census Bureau has found that the percentage of the workforce with employer-based coverage has declined to 59.7 percent in 2006.
Play-or-pay mandates “force employers to provide compensation above the competitive market price for low-skilled workers least able to compete in the market that the program was intended to help,” the authors said.