STATE HEALTH REFORM - EFFECTS ON LABOR-MARKETS AND ECONOMIC-ACTIVITY

Individual states are actively weighing health cave reform proposals a nd their potential impacts on many levels, including states' own. econ omies. This article considers the effects on state economies oft?No in struments of health reform: employer mandates and cost containment. Th e literature suggests that an employer mandate will reduce employees' wages in the long run. In the short run, however to compensate for the costs associated with mandated health care insurance for their employ ees, firms may raise their prices to consumers, reduce the number of e mployees, or allow a drop in profit margins. By increasing health care spending and the number of insured persons, mandates would also incre ase states' levels of economic activity. Though cost containment may d ampen the stimulative effects of expanded coverage, resources not spen t on health care as a result of effective cost containment. might be r edistributed to other sectors in a state's economy.