More about Massachusetts’ health reform

From Mandate-Based Health Reform and the Labor Market: Evidence from the Massachusetts Reform, by Jonathan T. Kolstad, Amanda E. Kowalski:

Relying on the reform implemented in Massachusetts in 2006, we estimate the empirical analog of our model. We find that jobs with ESHI [employer-sponsored health insurance] pay wages that are lower by an average of $6,058 annually, indicating that the compensating differential for ESHI is only slightly smaller in magnitude than the average cost of ESHI to employers. Because the newly-insured in Massachusetts valued ESHI, they were willing to accept lower wages, and the deadweight loss of mandate-based health reform was less than 5% of what it would have been if the government had instead provided health insurance by levying a tax on wages.


  1. According to their estimates, there was nearly a one-to-one trade-off between wages and provision of employer-sponsored health insurance in Massachusetts. Firms that complied with the mandate and offered insurance for the first time, reduced wages commensurately, on average.
  2. Relying on an individual mandate was more efficient, in the sense of dramatically lower market distortions than a “Medicare for All” type program fully financed by taxes. This stems, at least partly, from the fact that people have an additional incentive to work when it’s the cheapest way to obtain insurance. (On the other hand, one can imagine a different counterfactual, a “Medicare for All” program that includes work incentives.)

I did not read the paper, but I saw it presented.


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