Labor Market Implications of Staff Small Group Health Insurance Reform

Published in: Public Finance Review, v. 31, no. 6, Nov. 2003, p. 571-600

Posted on RAND.org on January 01, 2003

by Kanika Kapur

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Small group health insurance reforms such as portability reform and premium rating reforms that limit the use of health status in setting premiums have been implemented in more than 40 states. The author determines the impact of these reforms on employment outcomes of individuals with high expected health costs. The effects of these reforms are mixed-the effect of the reforms on small firm hiring and job mobility of costly subgroups is often statistically insignificant. There is some suggestive evidence that rating reforms increase job mobility for the sick. However, rating reforms may redistribute health insurance costs from the sick to the old and, as a result, reduce employment opportunities for the old. Portability reform that aims to reduce job-lock does have a positive effect on job mobility; however, on the whole, the results suggest that the effect of the full package of reforms on job mobility is likely to be small.

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