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Wednesday, October 31, 2012

Gamage: ObamaCare's Perverse Incentives Will Hurt the Working Class

ObamaCareWall Street Journal op-ed:  ObamaCare's Costs to the Working Class, by David Gamage (UC-Berkeley):

It is time to move past the debate over whether ObamaCare was a good or a bad idea. I count myself as an ObamaCare supporter, but this doesn't blind me to the law's flaws. Regardless of who wins the presidential election, bipartisan compromise will be necessary to reform health care in a constructive way.

The most important provisions of ObamaCare are scheduled to take effect in 2014. I have been researching ObamaCare and assisting with its implementation, and have come to this realization: Without further reforms, the law will create unnecessary costs for working-class Americans. ...

Conservative and liberal economists have long criticized the tax exclusions for employer-sponsored coverage on the grounds that they drive up health spending and provide far more tax benefit for higher-income than for lower-income taxpayers. Sen. John McCain proposed replacing these subsidies with better-designed tax credits when he ran for president in 2008. Yet ObamaCare failed to reform these older subsidies for employer-sponsored insurance.

ObamaCare's perverse incentives result mainly from creating a mismatch between the subsidies for individual health insurance and those for employer-sponsored insurance. Beginning in 2014, lower-income Americans will be eligible for far greater subsidies if they aren't offered employer-sponsored coverage, qualifying them for the new subsidies available for individual insurance. In contrast, higher-income taxpayers will be eligible for far greater subsidies if they get employer-sponsored coverage.

To resolve these perverse incentives, we should adopt a variation of Sen. McCain's proposals and replace the tax exclusions for employer coverage with tax credits. To the extent possible, we should provide the same subsidies for employer-based insurance as for individual insurance.

http://taxprof.typepad.com/taxprof_blog/2012/10/gamage-obamacares.html

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Comments

Yes the law SHOULD be amended ....but like everything else that is flawed Congress is too busy doing nothing....too bad we don't have CongressCare...a law that allows citizens the right to sue for malfeasance and stupidity...Then we could all get some action.

Posted by: Sid | Oct 31, 2012 8:21:13 AM