Wednesday, July 08, 2009

Employer Mandate=Assanine

Johnathon Cohn breathlessly reports that Wal Mart has broken with its business brethren by endorsing the inclusion of an Employer Mandate. I understand why Cohn finds this to be good news, it portends easier passage of Health Care reform. I, however, think an Employer Mandate is idiotic. It just further cements the status quo. We need to move away from an employer based system. The downfalls associated with an employer based health care system are many but here goes a list:

1. Reduces labor market flexibility by inducing job lock and creating greater impediments to starting a business
2. Assuming the tax exclusion remains in place, which is sort of the whole point if you were to have an employer mandate, the employer mandate is regressive as the tax exclusion primarily benefits higher income folks.
3. Making the same assumption as in point two, the tax exclusion incentivizes medical expenditures without regard to outcome thus exacerbating medical cost growth...
4. Which will cause stagnant wages or declining for the majority of workers as we saw in this last decade.
5. Employer incentives aren't very well aligned with those of the employee, this is devastating with regards to the management of chronic diseases.
Hooray for Employer Based Health Care!

That Wal Mart has endorsed the employer mandate is a bit surprising but not shocking. Google "bootleggers and baptists" to see why their endorsement shouldn't be so shocking.

I have found the whole health care debate to be underwhelming. There has been much handwringing about the inclusion of a public plan and potential cost savings to be reaped from said public plan's purported administrative cost savings (one time savings at that). So much of the debate has really centered around how to expand on the status quo instead of transitioning to a sustainable system.

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