Villains are notoriously bad at getting people to work for them in way that don't backfire, if the heroes nearly never having to deal with 10000000000 now-unemployed henchmen is any indication... y'know, I'm surprised this doesn't break the economy... The Great Depression saw a 20%-ish unemployment rate so I'm going to assume 20% of the population out of work is enough to cause problems for a nation. And considering how pervasive the villain's forces tends to be, I'm going to assume they're the size of those "too big to fail" type companies, if they're not a kingdom of evil on its lonesome. Though maybe this is less of a problem if the villain's henchmen aren't human because humans are racist like that and you can kill monsters with reckless abandon and get away with it and goblins, orcs, demons, zombies, ghosts, and succubi don't seem to get/need a living wage beyond "rape and pillage" Though to be fair, many historical armies considered "rape and pillage" as a soldier's wage bonus... IT'S NOT WAR UNLESS YOU'VE GOT A SOUVENIR! Soldiers love souvenirs.
Though even with coercing people, there's limits to the coercion. They're supposed to be scared of you, not actively working against you or being intentionally negligent when you're not looking.
Well, coercing people into hard labor doesn't seem that hard since you can use a normal not badass person so they can't be that powerful... but coercing people who are significant quantities of badass... >_> that's treading on thin ice.
Anyway, "health insurance" might be a really stupid running gag.
Though considering that KaxenLand is a bit on the crapsack side, comprehensive insurance that isn't a scam would probably be a good idea.
Though on account the KaxenLand education system is built on brainwashing children...