Morning Must-Read: Austin Frakt: Obamacare’s Labor Market Tax Relief
Austin Frakt: Obamacare’s labor market tax relief: “In addition to the new taxes it imposes, Obamacare includes the relief of a significant labor market tax. Surprised?…
[P]rior to January 1, 2014… [people with] job[s] with employer-sponsored health insurance… enjoyed (1) tax-free health benefits (the big ESI tax subsidy), (2) guaranteed issue (the group plan had to take you, pre-existing conditions and all), and (3) community rating… the “Big Three”…. [But] individual market insurers in many states could deny you coverage or charge you more based on your health…. The labor market was clearly tilted by an explicit tax provision (the ESI tax subsidy) and two implicit ones (the existence of guaranteed issue/community rating in some labor market circumstances but not others)…. [This is a] labor market tax, albeit a complicated one…. Relative to those with an ESI option, those without were taxed: (i) Retired early to spend more time with grandkids or to care for a sick spouse? Taxed. (ii) Took a job with a small, non-profit that didn’t offer coverage? Taxed. (iii) Left the big firm to start your own business? Taxed. (iv) Laid off and exhausted COBRA benefits? Taxed. (v) Company went bankrupt and you couldn’t immediately find a new job with ESI benefits? Taxed. (vi) Fresh out of school but couldn’t find work with ESI benefits. Taxed. You get the idea…. Now, let’s consider some objections, some of which came up in emails to me: When considering ACA taxes, you can’t fold in stuff that isn’t in the ACA, like the ESI tax subsidy or that ESI is guaranteed issue/community rated? This makes zero sense. If we take this objection seriously, then we can’t compare the post-ACA world to the counterfactual, pre-ACA one at all. The point isn’t that ESI features existed pre-ACA. The point is that the difference between what a potential or actual labor market participant faces across options pre- and post-ACA has changed. Some tax has been removed (per the above) as some have been added. You can’t just focus on the added taxes and not consider that which was removed. That’s cherry picking and incomplete.
The context is Casey Mulligan’s article for the New York Times, in which he talks about the taxes on labor added by ObamaCare and not about the the removal of job lock at all. The net effect is that somebody reading Casey Mulligan in the New York Times winds up knowing less about ObamaCare than they did before because of Mulligan’s incomplete cherry-picking.
Shouldn’t the New York Times choose columnists who play it straight, or at least have editors who rein their columnists in when they don’t play it straight?