AEIdeas

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Discussion: (5 comments)

  1. Benjamin Cole

    The GOP and AEI seen content with the VA model of care and it works for millions of veterans—why not expand to cover everybody? Has Biggs ever written that the VA reduces work incentives?

    1. Andrew Biggs

      I’m not sure it does (or at least not as much as the ACA) because, as far as I know, the VA subsidy doesn’t phase out in the same way that the ACA subsidy does.

  2. I hate to bring this up, but the CBO is comprised of, you know, people… who make projections that, however well-intended, don’t necessarily come true.

    The argument that it is likely to come true is pretty sound. But, so is its counter: The target audience for this social program is unlikely to “do the math” to determine the break-even point for total income. Consequently, the impact on labor will be negligible.

    Which one will prove out? We won’t ever know for sure. The only way to know for certain would be to “turn back time” and replay the next few years without the ACA. Since that can’t happen, we’ll be down to anecdotes and projections once again when we try to “calculate” the law’s effects at some future date. It will be a pointless effort that can only yield opinion, not fact.

    All social programs produce winners, losers, and unintended (and/or unmeasurable) consequences. Social Security almost certainly influences people to retire rather than keep working. Welfare almost certainly influences people to lower their ambitions. But these programs are generally popular, in part because their absences would seem to be far worse alternatives. So, maybe “popularity” is the sole yardstick for measuring the worth of a social program? If a program proves popular, we keep it. If not, we either change it or get rid of it. I give enough credit to the collective wisdom of the people being governed to be able to discern the difference.

    1. Andrew Biggs

      Dagbone, Your point isn’t irrational — you can’t respond to incentives you can’t figure out — but the incentives in the ACA are pretty clear-cut. Moreover, the CBO’s estimate relies upon other studies of how people actually do react to incentives, so (at least in theory) they’re catching the fact that people don’t respond as theory says they might.

      1. The incentives may be clear-cut to you as a skilled economist with very strong intellect and a vested interest in sorting out this particular issue. But for the rest of us–myself included!–I’m not so sure.

        And yes, I’m sure the CBO is as good as it gets when it comes to methodology, practice, interpretation, and projection. But when it comes to “knowing the unknowable”, I’m just not sure that being the best is particularly useful.

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