Will a “play-or-pay” policy for health care cause job losses?

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June 2009

Will a “play-or-pay” policy for health care cause job losses?

by Phillip Cryan

A play‐or‐pay employer contribution policy for health care 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, 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.

Phillip Cryan of the University of California, Berkeley explored these concerns in a paper for the Economic Policy Institute and the Institute for America’s Future. He found that concerns about significant job losses resulting from such a policy are unfounded and that a more likely outcome would be significant job gains.

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