We examine the effects of the most durable employer health insurance mandate in the United States, Hawaii’s Prepaid Health Care Act, using Current Population Survey data covering the years 1979 to 2005. We find that Hawaii’s law increased insurance coverage over time for worker groups with low rates of coverage in the voluntary market. We find no statistically significant support for the hypothesis that the mandate reduced wages and employment probabilities. Instead, its primary detectable effect was an increased reliance on part-time workers who are exempt from the law. We arrive at these conclusions in part by use of a variation of the classical Fisher permutation test that compares the magnitude of the estimated “Hawaii effect” to “placebo effects” estimated for the other US states.
About the Authors
Robert G. Valletta is senior vice president and associate director of research in the Economic Research Department of the Federal Reserve Bank of San Francisco. Learn more about Robert G. Valletta