On ObamaCare and “takers”

Last updated on: February 8, 2014 at 10:33 pm by Jane the Actuary

On ObamaCare and “takers” 2014-02-08T22:33:00-06:00 Jane the Actuary

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So the whole fallout from the CBO report (that is, the CBO report predicting people will drop out of the labor force due to the impacts of ObamaCare) is discouraging.

To recap, there are two primary elements of people leaving the labor force or scaling back their work hours: the cliffs and discontinuities of ObamaCare (which I’ve griped about before) and the core fact that, if you get more income, in some form, from the government, you need to earn less. Who does this impact? Not the guys living in their parents’ basement, who aren’t really basing their life decisions on availability of health insurance.

These are the real-life scenarios where the availability of subsidized health insurance will impact people’s decisions of whether or how much to work:

The biggest one, it seems to me, is people deciding whether or not they can early-retire, sitting down with their financial advisors and crunching the numbers. Bringing down the cost of health insurance dramatically has got to make a big difference for people in making those decisions — in the same way as age 65 is a significant marker for people pre-ACA due to Medicare.

And the second group is when the secondary-earner in a couple is the one at a job with health insurance benefits. A colleague of my husband’s some time ago, between her comparatively low salary and the high daycare costs for her three kids, told him that she didn’t actually have any net after-tax after-daycare wages, but just worked for the healthcare benefits, because her husband was self-employed. Whether she would have chosen to work part-time, or not at all, if they had low-cost healthcare elsewhere, I don’t know, but it seems probable that in such situations, people will make exactly this sort of decision.

Will there be considerable numbers of people, who had worked overtime to be able to afford individual health insurance, scaling back? I don’t know.

In any case, as Peter H. pointed out in a comment on a prior post, in a country in which the government provides universal healthcare of some sort or another, the notion of an individual working “for the health insurance benefits” doesn’t exist — and yet it’s not as if the United States has a uniquely high labor force participation rate as a result of the work/health insurance tie. He cites Canada, in particular, as having a high labor force participation rate. And there are many factors feeding into these sorts of differences, and I would tend to believe that this aspect is only one part of a bigger picture. Now, I’ve said before that I support a voucher-based system for providing universal healthcare (keep it market-based but make it universal precisely to avoid the cliffs and discontinuities of means-tested systems), and I just don’t believe that, especially in the long-term, switching to such a system is going to destructively pull people out of the labor force.

Anyway, I raised this issue — that people making these decisions are making rational sensible decisions — as a comment on another blog, and got replies to the effect that these sorts of people are “taking advantage” (meant negatively) of the system, and similar reactions are all over the frickin’ blogosphere. People making use of subsidies are just one more instance of the “takers” and the “47%” who just laze around being subsidized by the remainder of us who work hard.

But look — how far do you imagine taking this? Quite some time ago, when “flat tax” proposals were all the rage, someone along the way proposed that the fairest tax of all would be to eliminate all income-redistribution programs and then divide up the cost of what’s left (defense, infrastructure, courts, etc.) evenly among all American citizens or residents. So I guess right now that would be (based on the current federal budget and a per-household figure) $30,000 per household per year, according to the Heritage Foundation. Anyone who’s not paying at least that much is a “taker” if you wanted to be slavish about it. On a local level, I suppose the metric could be this: are you paying at least as much in taxes to fund the public schools (maybe over your lifetime?) as those same public schools are spending to educate your kids? If not, TAKER! What about all the subsidies for mass transit? Do you ride the train into the city at 50% of the cost? TAKER! Oh, and Medicare — do you really think the contributions you’ve paid in over the years cover the cost of your post-65 healthcare? TAKER!

Look, it’s preposterous for Jay Carney, Nancy Pelosi and other ObamaCare supporters to launch into these idealized notions that people will be freed to pursue their dreams and will write poetry and compose symphonies that will enrich the world around them, now that they’re no longer dependent on a soul-sucking corporate job for healthcare.

But to split the world into those who get more benefits from government than they pay in, and the reverse, gets us just as nowhere, especially if you start to seethe so much that you can’t think through the issue and discuss it sensibly any longer.

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