Will a "Play or Pay" Policy For Health Care Cause Job Losses?

This report estimates the effects on employment of adopting a “play‐or‐pay” employer contribution policy for health care. Its main finding is the following: concerns about significant job losses resulting from such a policy are unfounded. Most likely there will be significant job gains. At the very worst, job losses would represent a few hundredths of one percent of employed workers.

A play‐or‐pay employer contribution policy would require employers who don’t provide their workers comprehensive health insurance to pay a new payroll tax to help fund public provision of health insurance for those workers. Many of the health care reform proposals currently under discussion in Congress incorporate such a contribution – as did the campaign proposal put forward by President Barack Obama.

In response to such proposals, both today and in past rounds of debate over health care reform, some scholars and policymakers have raised the concern that a play‐or‐pay employer contribution might lead employers to lay off workers. Especially given the extent of job losses throughout the U.S. economy in the current recession, this concern warrants serious attention. Would an employer contribution policy for health care lead to job losses? Approximately how many? This report seeks to answer those questions.