Dec. 2017

Arbitration generally costs less

By Erik Heller Tags: |   0 comments

In a new study titled, “Obama’s Prescription for Low Wage Workers: High Implicit Taxes, Higher Premiums,” I show that the House and Senate health care bills would impose implicit tax rates on low wage workers that exceed 100 percent. Those mandates and subsidies would impose effective marginal tax rates on low wage workers that would average between 53 and 74 percent and even reach as high as 82 percent broad ranges of earned income. By comparison, the wealthiest Americans would face tax rates no higher than 47.9 percent. Over smaller ranges of earned income, the legislation would impose effective marginal tax rates that exceed 100 percent. Families of four would see effective marginal tax rates as high as 174 percent under the Senate bill and 159 percent under the House bill. Under the Senate bill, adults starting at $14,560 who earn an additional $560 would see their total income fall by $200 due to higher taxes and reduced subsidies. Indeed, the legislation effectively removes any penalty on such behavior by forcing insurers to sell health insurance to the uninsured at standard premiums when they fall ill. The legislation would thus encourage “adverse selection” unstable situation that would drive insurance premiums, government spending, and taxes even higher. The House wants a 5.4 percent surtax on couples earning at least $1 million in annual income. The Senate wants a 40 percent excise tax on employer provided plans. The Senate will win on this unless the public discovers that a large portion of the so called Cadillacs are really middle class Chevys, expensive not because they deliver more benefits but because they have higher costs.

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