The Effect of an Employer Health Insurance Mandate on Health Insurance Coverage and the Demand for Labor: Evidence from Hawaii

Long before passage of the federal health care reform act in 2010, which eventually will impose an individual mandate to obtain health insurance, policy makers had considered the alternative approach of employer health insurance mandates as a strategy for expanding coverage. At the Federal level, the failed health care reform plans proposed by the Nixon administration in the early 1970s and the Clinton administration twenty years later both included an employer mandate. At the state level, laws imposing employer mandates in Massachusetts (1988), Oregon (1989), Washington (1993), and California (2003) were overturned by voter referendums or voided due to con!icts with the federal Employee Retirement Insurance Security Act (ERISA). Since these laws have not been adopted, direct evidence regarding the effects of an employer sponsored insurance (ESI) mandate is scarce. One state law that has been enforced for over two decades and therefore provides a potential source of information on ESI mandates is Hawaii’s Prepaid Health Care Act (PHCA). Hawaii’s mandate requires that essentially all private sector employers