Steve S writes:
Steve Entin at the National Center for Policy Analysis has written on the very issue of the subsidies vs the tax exclusion. His conclusion:
Adding the subsidies for premiums and cost sharing, the family getting the health exchange policy would receive a total subsidy of $17,400, while the family receiving employer-based insurance would receive a total subsidy of $4,143.
That is a huge differential. The whole piece is here: http://www.ncpa.org/pdfs/Health-Insurance-Exchange-Subsidies-Create-Inequities.pdf
File under "Not a political equilibrium."
I generally try not to fill my head with gobbledy gook, but a google of “what is a health insurance exchange?” yields…
http://en.wikipedia.org/wiki/Health_insurance_exchange
Instructive. Well, no, not really. So, is an “exchange” summarized as “that government patch that works around the government rules against selling across state lines”?
So, the exchange is such a great idea that it requires quadruple the subsidy, when they could just eliminate the rules that require such a workaround?
“government rules against selling across state lines”: awfully naive of me I know, but I had assumed that the whole point of a Federal Union was to stop that sort of restraint of trade.
Under the new law, the exchange is more than a work around for inter-state restrictions. Starting in 2013, the sale of individual household policies will be prohibited (except grandfathered policies and supplemental insurance) (Section 102(c)). Plans offered on the exchange must be approved by the Health Choices Commissioner (a newly created position) (Sections 201, 203-204). Supporters say this will lower prices by enabling the government to bargain on behalf of individual households. To skeptics, this looks like a barrier to entry.
“to kill the employer-based system, which really does have to go.”
Which is why they fine employers that don’t offer insurance, and fine individuals that don’t get insurance, and eliminated the taxation of employer benefits, and…
The simplest explanation is that these schmoes lost track of what the hell they were doing about 11 months ago.
“File under “Not a political equilibrium.”"
Also file under “Not an economic equilibrium.”
As others have pointed out, although there is an employer mandate to provide insurance the penalty for not providing it is just $2000. Given the difference in the subsidies it sounds like the employer and employee would be leaving an awful lot of money on the table if they don’t negotiate a split of the gains from opting for paying the penalty rather than continuing employer based coverage. (And that’s even before taking account of the going naked strategy of the individual paying penalties until they get a health condition requiring expensive treatment.)
What am I missing? Will premiums in the exchanges by that much higher?
the 1st three comments strike me as typical of conservative thought:
federalism is good, except when it leads to results conservatives don’t like.
same with the much denounced judicial activism and “the will of the people”
The NCPA is a libertarian group, I don’t trust their numbers, they know what they wanted to find before they found it.Next, we’ll get a study from CATO.
federalism is good, except when it leads to results conservatives don’t like.
No, federalism is good, except when it is used to promote restraint on trade, which is why we have the interstate commerce clause:
http://en.wikipedia.org/wiki/Commerce_Clause#Significance
Tom,
Here’s a little homework for you. Not because I care about your opinion, but because I see the same comment under different names all the time.
Read through the comments around here and ask yourself how often you see the following statement:
“The XYZ is a liberal group, I don’t trust their numbers, they know what they wanted to find before they found it.Next, we’ll get a study from Brookings.”
Never? Is that because us libertarians think that liberals are impeccably honest and ethical with their numbers?
And liberals don’t like centralization when it leads to results liberals don’t like. Do you have a point?
And liberals don’t like centralization when it leads to results liberals don’t like. Do you have a point?
Only a conjecture, but I believe the point is that someone who makes a “states-rights” argument is supposedly arguing from principle, not consequences, while only caricature liberals argue that centralization is a good in and of itself.
Whoo Hoo,
My comment gets a lift onto the front page!
Russell,
I don’t know what sources you read but economists across the political spectrum believe that the tax exclusion is inefficient and that we would be better off without it.
What follows from that is very different between you and libertarians. I prefer a Singaporean model. You prefer a Canadian model. Both achieve the goal of near universal access to health care. But the Singaporean model leads to much more personal responsibility, a working price system and much lower cost. Here’s a post that Bryan Caplan did on health care in Singapore a couple of years ago: http://econlog.econlib.org/archives/2008/01/singapores_heal.html
Steve
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