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State Mandated Benefits and the Small Firm's Decision to Offer Insurance

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  • Jensen, Gail A
  • Gabel, Jon R

Abstract

In the last decade, the number of Americans without health insurance has grown, partly due to an erosion in employer-based coverage among workers. This paper examines the extent to which state-mandated benefit requirements and other state insurance regulations discourage small firms in the private sector from providing health benefits. Using data on 1320 firms observed in 1985 and 492 firms observed in 1988, we estimate two models of small firms' decisions to offer health insurance (one for each data set), and then use them to assess the effects that mandates had on purchasing decisions in both years. We estimate that 19 percent of noncoverage among sample businesses in 1985 and 43 percent of noncoverage in the 1988 sample was attributable to state-mandated benefits. State continuation-of-coverage requirements were particularly burdensome for firms. With continued.growth in the number of state mandated benefit requirements, we should expect a steady rise in the small firm's propensity to forgo insurance coverage. Copyright 1992 by Kluwer Academic Publishers

Suggested Citation

  • Jensen, Gail A & Gabel, Jon R, 1992. "State Mandated Benefits and the Small Firm's Decision to Offer Insurance," Journal of Regulatory Economics, Springer, vol. 4(4), pages 379-404, December.
    • Handle: RePEc:kap:regeco:v:4:y:1992:i:4:p:379-404
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    Cited by:

    1. M. Kate Bundorf & Melinda Henne & Laurence Baker, 2007. "Mandated Health Insurance Benefits and the Utilization and Outcomes of Infertility Treatments," NBER Working Papers 12820, National Bureau of Economic Research, Inc.
    2. James Bailey & Douglas Webber, 2018. "Health Insurance Benefit Mandates and Firm Size Distribution," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 85(2), pages 577-595, June.
    3. Anca Cotet & Lee C. Spector, 2012. "The Impact of Diabetes Mandates on Infant Health," Working Papers 201204, Ball State University, Department of Economics, revised Sep 2012.
    4. W. David Bradford & Lee Rivers Mobley, 2004. "Employment‐Based Health Insurance and the Effectiveness of Intrafirm Competition between Insurance Providers," Southern Economic Journal, John Wiley & Sons, vol. 70(4), pages 1012-1031, April.
    5. Li, Xiaoxue & Ye, Jinqi, 2017. "The spillover effects of health insurance benefit mandates on public insurance coverage: Evidence from veterans," Journal of Health Economics, Elsevier, vol. 55(C), pages 45-60.
    6. Aparna Mathur, 2010. "Health insurance and job creation by the self-employed," Small Business Economics, Springer, vol. 35(3), pages 299-317, October.
    7. Andersen, Martin, 2015. "Heterogeneity and the effect of mental health parity mandates on the labor market," Journal of Health Economics, Elsevier, vol. 43(C), pages 74-84.
    8. Judith Shinogle & David Salkever, 2005. "Firms' Demand for Employment-Based Mental Health Benefits," NBER Working Papers 11436, National Bureau of Economic Research, Inc.
    9. Anca M. Grecu & Lee C. Spector, 2015. "The impact of diabetes insurance mandates on infant health," Southern Economic Journal, John Wiley & Sons, vol. 81(4), pages 1040-1061, April.
    10. Joanna N. Lahey, 2012. "The efficiency of a group‐specific mandated benefit revisited: The effect of infertility mandates," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 31(1), pages 63-92, December.
    11. C. J. Krizan & Adela Luque & Alice Zawacki, 2014. "The Effect Of Employer Health Insurance Offering On The Growth And Survival Of Small Business Prior To The Affordable Care Act," Working Papers 14-22, Center for Economic Studies, U.S. Census Bureau.

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