ABSTRACT
This chapter presents several observations on the economic impact of employment-based mandates. It reviews possible rationales under which employment-based mandates may be an efficient mechanism and considers the efficiency costs of mandates. The chapter considers some practical issues of mandates, such as lack of compliance and implementation issues. Opponents of employment-based mandated benefits tend to ignore market failures that may be improved by government intervention. Supporters of employment-based mandates tend to ignore the distortions that mandates create, and overlook implementation problems. Mandates have gained increased popularity in the United States because of concern over the high budget deficit and rising resistance to direct taxation. These factors may explain the already high use of payroll taxation to finance social programs in the United States. Employment-based mandates are unlikely to dominate alternative financing mechanisms. An employer mandate has the potential to extend health insurance coverage to a large number of uninsured individuals without radically restructuring the insurance industry.
