Health Insurance and Labor Markets
Tuesday, July 14, 2009 at 12:09 AM EDT
Health insurance is not just a health issue. Itâ€™s also a jobs issue. Why? Because about 60% of non-elderly Americans get their health insurance through an employer or a labor union. As a result, health insurance and employment are closely related.
As lawmakers consider changes to our system of health insurance, they should therefore keep an eye on the potential implications for jobs and wages. To help them do so, the Congressional Budget Office yesterday released a very helpful brief (see also the accompanying blog entry) that discusses many of the linkages between health insurance and the labor market.
Among other things, CBO reiterates a point Iâ€™ve made previously: that the costs of health insurance are ultimately born by workers through lower wages and salaries:
CBO then goes on to discuss a range of potential policies, including ones that would impose new costs on employers. Such policies might require employers to provide health insurance to their workers (an employer mandate), for example, or might levy a fee on employers who donâ€™t provide health insurance (play or pay). CBO concludes that, consistent with the argument above, employers would generally pass the costs of such measures on to their employees through lower wages and salaries. Such adjustments wonâ€™t happen instantly, so there may be some short-term effect on employment, but over time the cost will primarily be born by workers through lower compensation.
One exception, however, would be workers who currently earn low wages. As noted on the blog:
This article originally appeared on Donald Marron.