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January 20, 2011

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Rob Crawford

Employers provide health insurance because wage controls during WWII forced them to compete for workers some other way.

a

Poor Ezra sounds a little bit butthurt there.

steve

Don't overlook the fact that Harvard can provide health insurance coverage for its employees for less money than if the employees purchased coverage on their own... and not just because the employer can deduct health insurance premiums.

Ari Tai

In the early push for Obamacare I offered that if health care was so important (like basic foodstuffs that are seldom included in sales taxes) let's make nearly all medical expenses tax free (save for clearly luxury items, as with some types of food).

This would remove the employer incentive and eventually employers would find employees would rather manage their own care and policies indepedent of the work-place (since lifetime employment is increasingly rare). And the current fairly twisted non-free market in health care would cure itself. Granted there are too many interests vested in the current non-competitive behaviors for this to be an easy sell.

Strawman Cometh

Couldn't put my finger on it, but Cohen seemed familiar

Danube of Thought

That's cold, Strawman--cold. But of course spot on.

Danube of Thought

If I understand what Ari Tai is saying, it is the same as allowing individuals to deduct their health insurance premiums the same way employers do.

The cosmic best solution, from a tax standpoint, is to eliminate all deductions, credits, exclusions and exemptions that exist for the purpose of encouraging some sort of favored behavior. Impose the tax on income, and let the taxpayer decide what he wants to do with the rest.

Annie Oakley

Hasn't anyone else noticed that Ezra Klein is not so very bright? He's young, he's arrogant, but intellectually rigorous and possessing critical thinking skills- Not. Is there a prize for hubris? Of course, he'd have to compete with Sheila Jackson Lee....

jimmyk

You've got that right DoT. That would mean making health care premiums paid by employers taxable. Not exactly popular, but if it were coupled with an offsetting cut in overall tax rates, it might fly.

Steve, you're right that large employers can get better rates because of the group aspect, but there's no reason groups can't be based on something other than your job. I think it might have been cathyf who said you could base groups on birthdays (you can only change your plan on your birthday), for example. There is plenty of other insurance that is not employment-based.

Hank

@Rob But WWII was like, over 40 years ago, so the actual reason that employers did anything is very confusing and hard for people of today to understand.

Ignatz

--so why the dumbed-down explanation--

That implies there is someone dumber than Ezra that he needs to simplify things for.
I question that.

bgates

Hey TM, you only ever quote Ezra Klein when he's saying something really boneheaded. Do you quote him every time you read him and he's always saying something stupid, or are you playing to your audience and just giving us "Kleinisms"?

(This is how anti-confrontational I'm feeling this evening: I'm asking TM to give me a reason to like Ezra Klein more. "More" is not the right word there.)

Frau Steingehirn

" That would mean making health care premiums paid by employers taxable."

Isn't that what John McCain proposed during his campaign?

bunkerbuster

``Food and fuel do not receive so generous a treatment.''
Alas, U.S. farm subsidies were north of $16 billion from the USDA alone, double the 1995 and with the fastest growth coming unsurprisingly in the mid-2000s when the GOP and K street ruled the House, Senate and executive.
And for fuel, especially oil, there are thicket of tax deductions, credits and government expenditures with tens of billions of dollars a year to help the industry, not to mention the maintenance of a military focused in no small part on insuring access to middle eastern oil and providing security for shipping lanes for tankers.

Slocum

Steve, you're right that large employers can get better rates because of the group aspect, but there's no reason groups can't be based on something other than your job.

And that's already possible. People running small businesses sometimes buy group insurance via membership in their local chamber of commerce, for example.

BUT...there is another reason why employers can get better rates--their employees are necessarily healthy enough to work. And if the work requires physical activity, so much the better. And if they tailor their job descriptions a bit, maybe they can get even healthier employees and keep their costs down. There was a controversy a few years ago about Walmart requiring physical activity of all employees (taking a turn collecting shopping carts) as a way of discouraging applications from unhealthy workers:

http://findarticles.com/p/articles/mi_qn4181/is_20051208/ai_n15923243/

Porchlight

But WWII was like, over 40 years ago, so the actual reason that employers did anything is very confusing and hard for people of today to understand.

Heh. Another reason to link Iowahawk one more time. I challenge you to get through this without laughing out loud.

Richard Aubrey

You can get better rates as an employer, but that's not what happens.
What happens is that because the premium is passed on as a cost of doing business, and is deductible, and is not reportable to the employee, you get a really fat plan with a really high premium.
It has better benefits because the premium is higher, or the reverse, than individual plans which the individual pays individually.
I am in the business, which would probably disqualify me from such discussions, but sometimes truth is just what it is.
You can't sell a plan to individuals which is as fat as the group plans because the premium is so high nobody will buy it. Doesn't happen.
Check out COBRA. People who look at their COBRA premium are shocked. Hardly anybody pays it. They try to find something cheaper.
When an employer fattens the group policy, he gets full value. If he tried to spend the same on wages, there'd be SS, state and local taxes, higher work comp and unemployment premiums and, in some retirement plans, higher retirement contributions.

Rob Crawford

Hasn't anyone else noticed that Ezra Klein is not so very bright? He's young, he's arrogant, but intellectually rigorous and possessing critical thinking skills- Not.

So what you're saying is he's the very model of a modern pundit-general?

Evan

Ezra's post was about why Greg Mankiw is a dickhead. Mankiw seems to claim that a bill that raises revenue and spends money cannot reduce the deficit even if the revenue is greater than the spending. To illustrate his point, he analogizes the health care bill, which spends money on something of value, to a bill that just gives Greg Mankiw money, which has very little social value.

Ezra's point is that Greg Mankiw is a faux-obtuse fartknocker who doesn't believe in arithmetic because he worked for a Republican. You can agree or disagree, but to call Ezra dumb because of an ancillary point about Mankiw's blind spots is pretty silly.

maryrose

Mankiw is really smart and was ahead of the curve in stating that the stimulus bill was a bust.

Rob Crawford

Mankiw is really smart and was ahead of the curve in stating that the stimulus bill was a bust.

Did he say so before it was passed? Because most of us knew it was "bust" before it was passed.

~FR

Ezra may be attempting to 'punch up' but that's a problem when he can barely reach Mankiw's kneecaps.

cathyf

Every so often people recommend books to read. I think that this is one everyone should read: Mancur Olsen's The Logic Of Collective Action. I read this as part of a college course 29 years ago, but it is still the definitive work on the subject. The course was taught by the author of this book: Collective Action by Russell Hardin. I haven't read it, but Hardin is very good and I expect that the book is, too.

Boatbuilder

Hey Bubu--If I told you that one good way to reduce the deficit was to increase the defense budget by $500 billion, while at the same time raising taxes by $750 billion, would you a) believe that the defense budget would go up by only $500 million; b) believe that the tax increases would really raise $750 million; c)think that the US Taxpayer was getting a good deal; and d) think this is a good way to reduce the deficit? (point stolen from Krauthammer).

Boatbuilder

Sorry, Bubu--I meant Evan.

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