Diagnosing Four Pros and Four Cons of Obamacare
- by Hannah Hartig
Website and registration issues aside, is Obamacare working? What does the future hold for the Affordable Care Act (ACA), and what will its effects on the economy and labor market be? Those are the trillion-dollar questions a recent campus panel debated days before Healthcare.gov ended its sign-up period at 11:59 p.m. on March 31.
Comprised of Tom Baker, Penn’s William Maul Measey Professor of Law and Health Sciences; Mark Duggan, Rowan Family Foundation Professor, department chair of the Business Economics and Public Policy Department, and faculty director of the Penn Wharton Public Policy Initiative; and Mark Pauly, Wharton’s Bendheim Professor, the panel agreed on Obamacare’s status: It’s too soon to tell.
While they debated (passionately) the particularities of the Affordable Care Act, the experts also came to a consensus on the following points:
+ More inclusive health care: The mission behind the legislation is to provide better health services to individuals across all income levels, regardless of age. In its most basic form, it is successful in restructuring the system to engender more respect for the elderly and for individuals living below the poverty line without consistent access to medical treatment.
+ Less “job lock”: Job lock is what you get when people stay with an employer because of health insurance. The ACA should work to standardize coverage offered by different insurers and encourage movement and responsiveness in the labor force.
+ Increased entrepreneurship: Pre-ACA, small businesses were three times more likely to not provide health benefits to employees because of the enormous cost of insurance. The ACA might help encourage entrepreneurship and increase startup growth by eliminating the fear of being unable to provide employees with affordable health insurance
+ Better compensation: In the past few years, wage growth was flat, yet productivity increased. Compensation in the form of higher wages was being given up because the cost of providing health care to employees was increasing.
– Substantial increase in premiums for younger individuals. Most likely, premiums for the under-60 crowd will go up.
– Increase in marginal tax rates. There is concern that the ACA will add up to five or more percentage points to the average marginal labor income tax rate among non-elderly household heads and spouses
– Employer mandate is problematic: The threshold is currently 50 full-time workers and/or 30 hours for full-time work. Businesses right at the cutoff may look to get around these requirements by hiring fewer people or cutting down on hours.
– Troubling subsidy cliff: The subsidy “cliff” would be concerning for those that see an increase in income from a promotion, or a family member entering the labor force, for example, only to then lose any subsidy when they enter a new tax bracket. Awareness and education would be essential to ensure individuals and families plan accordingly.
Issues to keep an eye on:
• Will we be able to demonstrate that providing health care translates to health benefits?
• What determines a “high-risk” individual. Will more people begin to be rewarded for “healthy behavior” in the future?
• Will more people retire and leave the labor force earlier because insurance costs have gone down?
The March 25 roundtable discussion was part of the Risk Regulation Seminar Series, sponsored jointly by the Penn Program on Regulation and the Wharton Risk Management and Decision Processes Center.