The Efficiency of a Group-Specific Mandated Benefit Revisited: The Effect of Infertility Mandates

Abstract

This paper examines the labor market effects of state health insurance mandates that increase the cost of employing a demographically identifiable group. State mandates requiring that health insurance plans cover infertility treatment raise the relative cost of insuring older women of child-bearing age. Empirically, wages in this group are unaffected, but their total labor input decreases. Workers do not value infertility mandates at cost, and so will not take wage cuts in exchange, leading employers to decrease their demand for this affected and identifiable group. Differences in the empirical effects of mandates found in the literature are explained by a model including variations in the elasticity of demand, moral hazard, ability to identify a group, and adverse selection.