The Affordable Health Insurance

We find that the increasing of health insurance premiums is borne primarily by workers.  Workers with health insurance through their employer see a decrease in their wages as health insurance premiums rise, so that they bear the full cost of the premium increase.  These increases in health insurance premiums may have significant effects on both health insurance markets and labor markets, including changes in the number of jobs, hours worked per employee, wages, and compensation packages.

The increase in health insurance premiums could increase unemployment and uninsurance, as employers face a choice between discontinuing health insurance benefits and employing fewer workers as benefit costs rise.  Understanding how labor markets adjust to increased health insurance costs is of growing policy importance.  The effects of such proposals on employment, wages, and health insurance coverage will be driven by the characteristics of labor supply and demand, institutional constraints on wages and compensation packages, and how much workers value the increase in health insurance costs, and must thus be estimated empirically.