Mandating Health Insurance Benefits for Employees

More than 37 million Americans are uninsured, and more than three-fourths of these are employed or are the dependents of employed individuals. Because the majority of the uninsured are employed, many believe that the expansion of employer-based insurance offers the best opportunity for improving access to care by this group. Mandated employer-based group coverage would extend health insurance protection to many Americans who are not now covered by insurance. As a result, these individuals could expect to pay less for their health care than in the past; this, in turn, is expected to induce this group to use additional services. The direct effect of mandated coverage on employers is an increase in employer premium payments for health coverage of workers. This Note presents estimates of the increase in health services use and the increase in employers' liability for health care costs that would result from mandating employer health insurance. Underlying the estimation is a model of the demand for episodes of medical care based on data collected in the RAND Health Insurance Experiment.