Will Trader Joe’s lead America to single-payer healthcare?

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  • Does the Obamacare mandate make employees more entrepreneurial and flexible?

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  • Is Trader Joe's showing the way to a single-payer health system?

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  • .@stanveuger's response to Liberally Yours: single-payer not inevitable

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This post is a response to Liberally Yours, a regular column in the Daily Caller featuring progressive radio host Thom Hartmann in conversation with libertarians and conservatives. Read Mr. Hartman's analysis here.

In his analysis of the broader impact of the Affordable Care Act, two of the claims Mr. Hartmann makes are almost certainly true. Some employers are indeed dropping health insurance for part-time workers, and turning full-time workers into part-time workers to avoid the employer mandate. And discontent about Obamacare is certainly widespread, from Congressional Republicans through the AFL-CIO to the general public.

Where Mr. Hartmann goes wrong is in attempting to describe why employers are responding the way they are, why those anti-Obamacare sentiments exist, and what this all should lead to.

Mr. Hartmann chooses Trader Joe’s, one of the very few large employers that offer health insurance to their workers, as his central example. He explains that Trader Joe’s can make its workers better off by offering a cash payment that allows them to buy heavily subsidized health insurance on the soon-to-be-active public exchanges. So far, so good, but the more relevant dynamic is employers reducing their workers’ hours, stripping them of health insurance, and sending them to these same exchanges. This lowers workers’ wages while forcing them to spend some of this new, lower income on health insurance.

They are not doing this to empower their workers, they are doing it to avoid paying for a new mandated benefit. How this is helpful is a mystery to me; if anything, it feels like an unintended parody of French workweek limitations. Mr. Hartmann believes that making these workers personally responsible for their health care will make them more flexible and entrepreneurial, makers instead of takers. Governor Romney may agree with him, but at least in the short run it really just makes them poorer.

And this goes to the heart of the problem with his analysis. Yes, it is, in principle, a good idea to separate the roles of employer and health insurance provider. It would make changing jobs, moving around, and starting new businesses a less risky endeavor, and it would end the unfortunate yet common situation in which losing your job also means losing your health insurance.

Yet what Mr.Hartmann offers as a way out is an even more extreme version of the true source of anti-Obamacare sentiment: a massive government bureaucracy that takes on the role of the nation’s one monopolistic health insurance provider, ending all possible competition and choice in that market forever. A much more straightforward solution would be to end the largest tax expenditure of them all: the exclusion from taxable income of employer-sponsored health insurance, which cost the federal government 250 billion dollars in 2013 alone, or almost a third of its total budget deficit. Such a move would bring all of the benefits Hartmann’s heart desires, without effectively nationalizing almost a fifth of the U.S. economy.

Moderately yours,

Stan Veuger

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About the Author

 

Stan
Veuger

  • Stan Veuger is a resident scholar at AEI.  His academic research focuses on political economy, and has been published in The Quarterly Journal of Economics. He writes frequently for popular audiences on a variety of topics, including health and tax policy. He is a regular contributor to The Hill, The National Interest, U.S. News & World Report, and AEIdeas, AEI’s policy blog. Before joining AEI, Dr. Veuger was a teaching fellow at Harvard University and Universitat Pompeu Fabra. He is a board member of the Netherland-American Foundation in Washington and at The Bulwark, a quarterly public policy journal, and was a National Review Institute Washington Fellow. He is a graduate of Utrecht University and Erasmus University Rotterdam, and holds an M.Sc. in Economics from Universitat Pompeu Fabra, as well as A.M. and Ph.D. degrees, also in Economics, from Harvard University. His academic research website can be found here.


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