More misleading arguments on health care

Terrific!  That means that 66 percent of Mass. employers won’t have to pay the payroll tax!  Great for Mass. business!  But this point of course says nothing about whether those employers that don’t cover their employees should be subject to a payroll tax.

I don’t understand Widmer’s point here.  First, he says that the House economist has overestimated the tax revenues by $475 million – that seems extremely unlikely to me, and I don’t know why we should trust Widmer’s numbers more.  Second, even if the House proposal is revenue neutral, isn’t eliminating the surcharge on employers who are already paying for their employees’ health care a good thing?  Isn’t it better to have the freerider employers picking up that tab, rather than making employers who do the right thing pay twice?

This is one of the stupidest arguments going.  The premise of the argument is that if it’s cheaper for an employer not to offer healthcare than to offer healthcare, the employer won’t offer it.  Seems reasonable enough, yet it’s demonstrably false.  Right now, of course, there is no financial penalty at all for an employer who decides to drop health coverage.  So by this logic, there shouldn’t be a single employer in Massachusetts supplying healthcare to its employees – yet Widmer just finished telling us that Mass. does better in this respect than almost any other state.  Obviously, employers provide healthcare for lots of reasons despite the cost – because it attracts better employees, because they think it’s the right thing to do, whatever.  That trend will only increase with a payroll tax, because then there will be less of a financial incentive to drop health benefits than there is now.

Hoo boy, don’t get me started.  Anyone who wants to know my thinking on why an individual mandate is a terrible idea can read those links.  Also, Widmer seems to think that an individual mandate will magically create “greater pressure on employers to offer coverage as firms compete to attract workers.”  Strikes me as highly dubious.  Employers who think offering healthcare attracts better employees already offer it, if they can.  An individual mandate won’t make offering healthcare any more affordable for employers, so those businesses that can’t afford to offer it still won’t, and those that can afford it but have concluded that there’s not enough of a competitive advantage in offering it are unlikely to change their minds just because of a new state law that doesn’t directly affect them.

This is Widmer’s best argument (although note the inconsistency between this argument, which says that there aren’t enough jobs to go around, and the last one, which assumed that firms have to “compete to attract workers”).  But again, everything is a trade-off.  Right now, all businesses are burdened by the existing healthcare system because (1) employers who provide healthcare pay twice; and (2) everyone’s taxes and healthcare expenses are increased because of costly care funded through the uncompensated care pool.  We’ve been over this argument six ways to Sunday.  Reasonable minds can differ on this one, but it’s surely not the slam-dunk Widmer seems to assume.

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