Economics faculty members Jen Platania and Steve DeLoach recently presented their paper, “The output effects of employer-based health insurance,” at the annual Society for Economic Dynamics (http://www.economicdynamics.org/nextSED.htm) conference in Vancouver, British Columbia, July 6-8th.
The study estimates the macroeconomic costs of the US’s existing system of financing health insurance whereby most of the costs are paid by employers. Such a system effectively imposes a “distortionary tax” on firms that leads to a reduction in aggregate employment while increasing hours worked per worker. The results indicate that the US’s reliance on employer-funded health insurance reduces GDP by 2.5% (approximately $312.5 billion).
The study has important implications for the current debate over the way health insurance is financed in the US.