Mulling Over Massachusetts: Health Insurance Mandates And Entrepreneurs
Date
2008-06-02T19:34:51Z
Authors
Jackson, Scott
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Abstract
The author examines the impact of the Massachusetts’ health reform law of 2006, Chapter 58 of the Acts of 2006: An Act Providing Access to Affordable, Quality, Accountable Health Care, which uses both individual and employer insurance-mandates on Entrepreneurship in the formation of new organizations. Previous studies have employed policy analysis and simulation modeling to the impact of theoretical mandatory health insurance regimes on small business, but the contributions of this study are that it is the first to explore the impact of a real world health insurance system or policy change on the entrepreneur and to do so empirically, in real time and within the most natural economic geography, a single MSA or Labor Market Area. It therefore tests whether a given social policy facilitates or impedes the formation of new organizations, and therefore, encourages or discourages employment growth via new organization formation. The author finds significant and persistent suppression of new organization formation when controlling for organization size, sector and owner gender, and limited evidence of geographic displacement of firms across the New Hampshire border. While theory suggests mandatory insurance should reduce insurance costs and improve worker productivity, the author finds that the regulation has no significant impact on worker productivity and limited evidence of increases in insurance costs, and estimates the expected cost in terms of lost employment, sales to the local economy and tax revenue to in the majority of cases exceed the benefit.
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Keywords
Entrepreneurship, Spatial econometrics, Job Mobility, Mandatory Insurance, Health insurance, Panel logistic regression