Impact of State Health Insurance Mandates on Self Insurance

This paper studies whether the recent proliferation of state mandated benefits laws (stipulating content in commercially sold plans) affects an employer’s decision to self-insure health insurance products and thereby avoid state law, as allowed by ERISA legislation. There is very little empirical research in this area using recent data beyond descriptive studies. We use a rich data set of employers, the Medical Expenditure Survey Insurance Component, together with data on state mandates from several sources (including Blue Cross Blue Shield internal data) to test our hypothesis. Our preliminary data cover 1997-2005; we expect to have extended our data series to 1997-2010 by the conference presentation. We find preliminary evidence suggesting that mandates have had no discernible effect on larger employers’ decisions to self-insure, but that employers with fewer than 100 workers may have shown some responsiveness in this regard.