ObamaCare Finds Clever Way to Kill Jobs

Posted on April 25th, 2011 by admin in National Health Care Systems, Political Economy, Tipping Points

As we have noted before, ObamaCare predictably has many surprises due simply to its obscene complexity. Especially troubling are effects caused by nonlinearities in the regulations. Whenever a “minimum” or “maximum” is inserted into a rule, you create a nonlinear effect which always invites gaming and surprises. As an easy example, minimum wage laws induce less hiring by employers who want to hire at a lower wage and cannot afford the minimum.

The latest surprising discovery in the 2500 pages of ObamaCare is how the rules will explicitly kill jobs. When you read the reason for this job killing, the nominal cause is a rule concerning the mechanism to provide a subsidy for people enrolling in a policy from one of the ObamaCare “exchanges”.

But one wonders if this effect, which could have been avoided,  derives from a government lust to create more dependencies on itself.

Read the analysis and explanation in Wall Street Journal, 25 APRIL 11: How Health Reform Punishes Work, by DANIEL P. KESSLER.

In this excerpt, the deadly “minimum” is revealed:

This new entitlement—which the chief actuary of the Centers for Medicare and Medicaid Services estimates will cost more than $100 billion per year once it is fully implemented—will damage the country’s long-term fiscal outlook. It also will introduce far-reaching negative effects on rewards to work and bizarre new inequities into American life.

The health law establishes insurance exchanges—regulated marketplaces in which individuals and small businesses can shop for coverage—and minimum standards for the insurance policies that can be offered. Because the policies will be so costly, there’s a subsidy for buyers that phases out as family income rises. This sounds reasonable—but the subsidies required to make a “qualifying” insurance policy affordable are so large that their phaseout creates chaos.

 

 

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