The Wage Effect

Would forcing employers to offer health insurance make Massachusetts businesses less competitive? Economists typically give short shrift to such arguments. Their data convince them that employees, not employers, ultimately pay for their health insurance by getting less in cash wages and pensions than they would otherwise get. In other words, employers' competitiveness relates to their total payroll cost. If employers pay more for health insurance, they offset those costs somewhere else to keep the total payroll where they want it. (November 11, 2005)