January 8, 2015
Wow! A widespread failure to consider the economics of health reform has led Republicans to push legislation to (unwittingly, may we suppose?) promote socialized medicine, and Democrats to oppose it!
The new Republican-sponsored bill ("Save American Workers Act") is about changing the "definition of full-time work" from 30+ hours to 40+ hours. But we are not really talking about definitions because the federal government does not publish the English dictionary.
What we are talking about the threshold for getting free stuff: government-financed health care in this case. Because of the original ACA, it is much more difficult for full-time workers to get subsidized coverage without experiencing an employment penalty than it is for part-time workers or non-workers. So the new bill is vastly increasing the number of people who would be deemed part time (for the purposes of getting free stuff), or could be deemed part time with a trivial change in their work schedule.
As a result, the bill will take millions of people off employer coverage and put them on Obamacare, all at taxpayer expense. The bill will put the U.S. dramatically closer to "single payer" than it would be with Obamacare as originally written.
The great political question is: which party will consider the economics first? Maybe Democrats? The White House statement makes me think that they understand the economics pretty well, and the Wall Street Journal editorial suggests that the Republicans may be lagging. Maybe the president will sign the bill, laughing all of the way to the history books?
Even if they are not concerned about the economic effects, do Republicans really want to bet that the president is not bluffing about veto -- i.e., bet that he is NOT willing to take another big step toward single payer with a Republican-sponsored bill that increases the deficit? And bet that the president is NOT willing to make his Department of Health and Human Services even more powerful than it already is? And bet that the president is NOT willing to make a move that makes several 2016 presidential contenders look like fools?
P.S. The Congressional Budget Office estimates that "only" one million people would change coverage coverage as a result of the bill. With all due respect for their admirable efforts, the CBO is wrong on this. They are using a variant of the Gruber microsimulation model (all of the sudden, even The Wall Street Journal is relying on the nonsense output from the model), which fails to include any market analysis and improperly uses elasticities from an era where the (non-elderly) alternatives to employer coverage primarily were Medicaid or being uninsured. All of this is explained in my book about the economic consequences of the health reform.