|Selected research from leading health care experts whose findings have a direct bearing on public policies effecting medical progress. Research is chosen based on its quality and relevance by the Medical Progress Today editorial staff.||
Health Insurance and Job Creation by the Self-Employed
There has been quite a bit of discussion on the impact of state health insurance mandates on the cost of health insurance for individuals and small businesses (and thus the likelihood that they will offer insurance coverage), but little public debate on the impact these mandates may have on the hiring decisions of small businesses. This is a particularly important issue since small businesses are the engine of new job creation in the U.S.
While there has been a lot of debate in recent times about job creation (and job destruction) by small firms, there are very few empirical studies that have tried to analyze this issue in a rigorous way. This is especially true for the U.S. Thus the attempt in this paper is to study the various factors that may determine the transition from sole proprietor to a small business employer. A new factor that this study highlights is the role of health insurance regulation, as captured by state health insurance mandates. Our results suggest that health insurance coverage and therefore health insurance mandates are a significant determinant of whether individuals decide to grow their businesses. The predicted probability of owning a business with at least 1 employee goes down from 0.45 to 0.34 i.e. nearly 10 percentage points as the number of mandates goes up from 0 to 16. The probability of owning a firm with more than 2 employees goes down by nearly 50 percent for the same change in mandated benefits, and by about 35 percent for firms with 6 or more employees.
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