The effect of health insurance benefit mandates on premiums

Abstract

This paper examines the effects of laws mandating that health insurance cover specific conditions, procedures, providers, and beneficiaries. Unlike previous work, this paper considers the market for employer-based health insurance rather than the much smaller individual market, and uses a panel data approach to account for unobserved heterogeneity among states. Using a fixed effects model, I find that the average mandate increases premiums by 0.44-1.11 percent annually. This implies that new mandates were responsible for 9-23 percent of all premium increases over the 1996-2011 period. © 2014 EEA.