The Effect of Mandatory Employer-Sponsored Insurance (ESI) on Health Insurance Coverage and Labor Force Utilization in Hawaii: Evidence from the Current Population Survey (CPS) 1994-2004

Using data from the Current Population Surveys, we examine the impact of Hawaii’s mandatory employer-sponsored insurance on health insurance coverage and employment structure in Hawaii. We find empirical evidence of three phenomena. First, private employer-sponsored insurance coverage for full-time workers (more than 20 hours per week) is more prevalent in Hawaii, other things held constant, than in other states and the U.S. as a whole. Second, there is avoidance of the employer-mandate in Hawaii by skirting the 20 hour rule, which changes the both the distribution of employment and the distribution of employment-based insurance coverage by hours worked. Third, Hawaii workers who match with part-time jobs without employer-sponsored health insurance obtain publicly provided health insurance or military coverage with higher probability than their counterparts elsewhere in the U.S. These results suggest that employer mandates induce both higher rates of coverage and labor market sorting.

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