Wednesday, September 12, 2012

who pays for what most people call "health insurance" (employees, employers, taxpayers)

An interesting article from the AP's Ricardo Alonso-Zaldivar (h/t: C-J)-- with some bad and missing econ...

The bad: "Premiums averaged $15,745, with employees paying more than $4,300 of that..."

Bro, employees "pay for" all of it-- some directly and the rest indirectly (through lower compensation in other forms). It's not helpful to write such things in such ways.


The missing: "Employees at companies with many low-wage workers pay more money for skimpier insurance than what their counterparts at upscale firms get."

All things equal, low-wage workers will want to devote less money (although perhaps a higher percentage) to "health insurance"-- similar to their willingness to devote less money to many other things, compared to higher-wage workers.

And given the progressivity of the tax code, lower-wage workers do not have as strong of an incentive to hide their compensation from taxes (compared to higher-wage workers). The progressivity of the tax code means that a broad subsidy for health care will necessarily be regressive. This is what most people in the old political parties consider to be "good policy choices".

1 Comments:

At January 5, 2013 at 1:20 PM , Blogger Warner Carter said...

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