Effects of Disability-Based Underwriting Prohibitions on the Labor Market

Abstract

In the U.S., a majority of the non-elderly population obtains health insurance coverage through an employer. State governments enacted regulations that prohibit the use of a variety of underwriting criteria, ostensibly to make insurance more affordable to those who would have otherwise been denied coverage or charged higher rates. This study tests whether regulations that restrict the use of disability status as an underwriting criterion for small businesses have unintended consequences in the labor market. The findings suggest that in states where disability is prohibited as an underwriting criterion, both disabled and able-bodied workers of small firms earn more than their counterparts not subject to such restrictions, albeit due to different causes.