Monday, June 29, 2009

San Francisco Fed On Employer-Sponsored Insurance

In keeping up with relevant current topics, the San Francisco Fed has issued a new paper analyzing how proposed new changes to health insurance planning may impact the broad economy by comparing to the example of the Prepaid Health Care Act (PHCA) adopted by Hawaii in the 1970's. Presumably, the administration has done its empirical homework as it pushes for various expensive adjustments to insurance plans, however it bears to read this piece for the conclusions, which essentially notes that not only are business likely to suffer higher incremental costs, the marginal employment of full time workers will likely suffer as more and more shift to find loopholes in proposed legislation, putting further stress on the already broken (un)employment landscape.

(Spoiler alert - stop reading here unless you want the conclusion).

Since we are well aware that our average reader has acute, recurring ADD, and it has been about 4 minutes since the last Adderall/triple espresso break, we present the SF Fed's conclusion below for the attentionally challenged:


We find that Hawaii’s ESI mandate has substantially increased health insurance coverage in the state. Our evidence also suggests that employers’ primary response to the mandate was increased reliance on the exempt class of workers who are employed for fewer than 20 hours per week. We did not find reliable statistical evidence for corresponding reductions in wages or overall employment probabilities. This may indicate that the shift to low-hour employment was the mandate’s primary labor market effect, although it may simply be that any adverse effects on wages and employment are too small to detect using our data and methodology. In addition to such labor market distortions, the results of our research imply that an employer mandate is not an effective means for achieving universal coverage. Although overall insurance coverage rates are unusually high in Hawaii, a substantial number of people remain uninsured, suggesting a need for alternative approaches if universal coverage is the ultimate goal.

In other words: much ado about not only nothing, but an increased "normal" full unemployment rate. But, hey, the President needs to keep the public distracted from the real problem, which is the nearly $3 trillion spent and $10 trillion guaranteed to purchase crutches of all sorts to prevent total economic collapse. Well, it worked for Houdini for a long while.

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