Sang-Hyop Lee, Gerard Russo, Lawrence Nitz, and Abdul Jabbar

Abstract

The purpose of this study is to examine the impact of Hawaiiís mandatory employer-provided health insurance on insurance coverage and employment structure in Hawaii. We hypothesize that mandated employer-sponsored health insurance has three effects on health insurance coverage and the labor market. First, it increases employer-provided health insurance coverage for full-time workers. That is, persons employed more that 20 hours per week. Second, it changes the distribution of equilibrium employment by hours worked as some employees seek and employers offer part-time employment to avoid the mandated benefit. Third, people who are not matched with full-time jobs with employer-provided health insurance will switch to other types of insurance, such as publicly provided health insurance or spousal military benefits, as an optimal response. Our empirical evidence generally supports all three hypotheses. First, private employment-based insurance coverage for full-time workers is more prevalent in Hawaii than the U.S. overall. Second, there is substantial avoidance of the employer-mandate in Hawaii by skirting the 20 hour rule. Third, switching to other types of insurance is significant compared to the other states and the U.S. overall.
Key words: health insurance, employer-sponsored insurance, working hours JEL Classification: I18, J32

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