Wednesday, April 1, 2015

Gary Burtless at Brookings is confused about Obamacare

He says:
The ACA established minimum standards on the health insurance provided under employer-sponsored plans. Some requirements increased the cost of providing health coverage for larger employers (those with 50 or more full-time equivalent workers). Employers that did not previously offer a plan are now required to offer one or to pay a sizeable financial penalty. Employers that offer parsimonious plans or plans that require heavy premium contributions from employees also face financial penalties.
These mandates and penalties have aroused opposition because of the fear that higher employer costs will curb hiring or induce some employers to create part-time rather than full-time jobs. While the fear is understandable, it is not clear whether the higher cost associated with improved insurance would be borne exclusively or even substantially by employers.  Except in the case of minimum-wage workers there is considerable evidence that most employer costs associated with health insurance are passed along to workers in the form of lower money wages.  Because workers place high value on the insurance benefits they receive, there is good reason to expect the additional cost of health benefits will be borne mainly by workers rather than employers.
True, but decompose the hiring data.  All of  employment growth came from service jobs in the last ADP report, none from manufacturing. And the great bulk of those service jobs were in healthcare. Who hires those workers?   Of the total growth in consumer spending, 3/4 of it came from paying for health care services according to the BEA 4th quarter update.  So all of consumer spending growth was mainly  taxes to subsidize the 4% who gained Obamacare coverage.  That result has another name, recession.

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