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California Economic Policy, Report · October 2006

Pay-or-Play Health Insurance Mandates: Lessons from California

Aaron S. Yelowitz

In 2003, Sacramento enacted one of the first “pay or play” laws, mandating that employers either provide health insurance to California workers or pay a fee. Although the law was never implemented, the pay or play idea has since caught the attention of many other states’ legislatures. In this issue of CEP, the author examines the probable outcomes of California’s version of pay or play and concludes that it was seriously flawed: Employment and wages would have stagnated as employers passed on their increased costs, and many in the population would have remained uninsured.


Health & Safety Net