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The scissors of interventionism, one blade blows out the costs, the other reduces the benefits of increased taxation.

Sorry, not the benefits of increased taxation, just the amount raised.

Maybe I just read this too quickly...if an employer drops an employee then the employee no longer has insurance. That's a benefit cut. Yes the employer could raise wages but since wages do not get the preferred tax treatment that benefits get, it only makes sense for the employer to raise wages a portion of the value of the policy that used to be in place.

The question is how is this not a wage cut for the employee? If he is able to purchase a private health policy he considers comparable to the one he lost then he happy. But you now have a libertarian home run. The person is buying insurance with their own money and paying less (presumably because the consumer drives a harder bargain and will look more carefully at health expenses when its their own dollar).

If he is not able to purchase a comparable policy then he has suffered a pay cut. But if labor markets were in balance how could employers suddenly cut millions of people's pay without any market reaction?

What I notice missing is any consideration of the fact that for years now the right has been telling us that breaking the idea of health insurance as an employer provided benefit was key to controlling costs. Well if 43M workers suddenly started buying their own insurance (with some subsidies & protection from insurance companies selectively pricing the sick out of the market), wouldn't that have some cost containment impact?

From a deficit point of view, increasing cash pay means giving up the tax break for buying health coverage. This means added subsidy cost must be offset against higher takes from the payroll, social security and income taxes. There's a bind here. If an employer suddenly dropped the $11K policy and replaced it with nothing that would be a big hit on the US gov't. But how could an employer slash wages $11K without workers noticing or caring? Likewise if employers boosted cash wages so employees can buy their own policies you get a tax revenue boost and, at least in theory, more consumer pressure on health costs.

I think you read it too fast. The point was that from the employer's perspective, they can be better off cutting their expenses on health care and substituting slightly less in wages instead. The worker will prefer that because the after-tax wage plus the subsidy for buying their own insurance, minus the cost of the insurance, will still put them ahead of where they were with the employer-provided insurance.

There's a point at which both the firm and the worker are better off with a mix of compensations that reduces insurance and increases the wage, but the wage doesn't have to rise the full value of the insurance because of the subsidy. That disortion, I should add, is why this solution doesn't really break the link between the job and the insurance.

But this seems like a smaller section of the workforce than 40+M. For that to work the employee must be able to buy the same quality policy with the higher pay and subsidy AND the employer must not loose more in added payroll taxes due to increasing cash wages. (Also keep in mind the employee too will see higher taxes on higher cash wages). Unless the subsidy is very, very large I think such a situation is more like two arrows meeting in mid air.

I love how people who oppose health care legislation immediately latch on to anything which confirms their position. Confirmation bias abound.

However, if you look at the census bureau's small business census numbers, and look at the legislation, you will see that Holtz-eakin's numbers are just extremely off base and ridiculously oversimplified.

Lets first consider the legislation -
Any firm with over 200 individuals employed by the firm must automatically enroll their employees in health care. I.e. - they must provide health care. Individuals, however, can choose to opt out.

Firms with 50+ people must either offer health care or pay a penalty of 2000 per person. Ok.

Now lets take a look at the census numbers -
http://www.census.gov/epcd/www/smallbus.html

If we look at the small business numbers from the census, in 2004 there were roughly 36,000,000 people who worked at firms that employed between 20-499 people. Now, EVEN IF every individual within this group worked for a company which employeed between 50-199 people (certainly not a probable occurrence), than that would only total 36,000,000 individuals. But you're not even in the realm of possibility here when he cites "43,000,000."

You might say that individuals who work at firms which employee more than 200 people would start to opt out. Maybe, but they probably still want health care. And there is no guarantee their employer will pay them more. There is also no guarantee to the employer that if they do decide to pay workers more, the workers will choose to opt out.

The cost to restructure contracts is expensive and the ability to coordinate such a move is difficult. I doubt a company could explicitly state that giving up health care would increase your salary. That doesn't seem very...how does one say...legal...to me, as it's incredibly discriminatory. Especially since Holtz-Eakin points out that offering this to higher salaried individuals would actually cost the company.

Holtz-eakin greatly over-states, and over simplifies, the problem after his first attempt to discredit the CBO in an op-ed in the NYTIMES was eviscerated by Doug Elmendorf and a host of other economists.

Also, I'd like the point out that having to deal with the lag times between coverage, and arcane exchanges is not something that families or even individuals want. There is more than just the simple financial equation here. It's much easier to just let your employer handle it than to have to handle it yourself. Less paper work, less hassle.

People would rather deal with the evil they know than the evil they don't. Even if their current plan through their employer sucks, at least they know just how much it sucks. The general consensus seems to be that anything provided by the government is worse than what is provided by the public sector, so that should drive people away from opting out of employer based health care and onto an exchange.

"But among the physically talented, those who work smart and work hard are the ones who make it. And that was the real point of my posts on work ethic."

So in other words, you are stressing the blindingly obvious, while safely posing as socially acceptable (ie, anti-hereditarian). That's helpful, truly.

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