Do Democrats Think Employer Mandates are a Free Lunch?

Probably. Until reality sets it. And then they try to undo everything. Casey Mulligan explains the parallels between the Michael Dukakis employer mandate in 1988 and the ObamaCare mandate today.

In 1988, Governor Dukakis pushed through a law (not to be confused with the health law signed by Gov. Mitt Romney almost two decades later) that sought to achieve universal health insurance coverage in Massachusetts with a legislative package that included a $1,680 penalty per employee per year on employers who did not provide health coverage to their employees…

Forty-four months after passage, the Massachusetts mandate was delayed three more years by a new law passed by the legislature over Gov. William Weld’s veto. The employer mandate was delayed twice more. As the fourth date approached for carrying out the 1988 employer mandate, the legislature repealed it entirely.

The employer mandate would return again in 2006 under Governor Romney, with its penalty set at one-tenth that of the Dukakis law…

If the federal law were to follow the same timeline, it would be repealed in June 2018, in the second year of a new presidency.

Comments (11)

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  1. Devid says:

    The Democrats treat the employer as a kind of cow which can produce milk with no limitation…Apparently, they are wrong. In the free market, there is a balance between expenditure and earnings.

  2. Yancey Ward says:

    To be fair, the behavior described seems to contradict the title of the piece- the Democrats in MA acted to delay, then repeal the mandate, so they may have passed it thinking it was free, but then rethought the issue and delayed it.

    I do think you will see a similar course for the ACA mandate- delay, delay, then repeal.

  3. Bob Hertz says:

    I have no agreement with the above prediction about the futility of an employer mandate in the USA.

    I would be curious to hear any theories as to why this kind of mandate fails miserably in the USA, but is a staple of life in Germany, France, Sweden, Japan, and numerous other wealthy nations.

    I suppose this is because we do not have a strong labor movement, one which could boycott and declare strikes against the resisters of mandate, and one which could defeat anti-mandate legislators at the polls.

    We also do not have pattern bargaining, where every employee in an industry makes about the same money. In America we allow firms to compete by finding cheaper labor than the current norm.

    I am not making a value judgement. If Dr Reinhardt is reading this, your comments would be welcome.

  4. Andrew M Garland says:

    Wikipedia: GDP per Capita 2012 [selected countries]

    Rank GDP Country
    06 . 51,704 . USA
    14 . 40,304 . Sweden
    16 . 39,718 . Iceland
    17 . 38,666 . Germany
    21 . 36,569 . UK
    22 . 35,855 . Japan
    24 . 35,295 . France

    Those other wealthy countries must be doing something wrong. Maybe it is their social welfare and labor policies.

  5. Bob Hertz says:

    I am not an economist, but I have always felt that GDP per capita is a terrible way to measure wealth, for at least two reasons:

    a. GDP includes debt. A grad student who takes out a $50,000 loan adds to GDP in the USA. A grad student at a tuition-free public University in Europe does not add to their GDP.

    b. GDP includes actiivities that are universally agreed to be wasteful, ranging from store security to divorce lawyers.

    So I contest your point.

    • Yancey Ward says:

      A grad student at a tuition-free public University in Europe does not add to their GDP

      Jeez, this couldn’t be more wrong. Your statement is only true if the cost of the “free public University” is literally zero. Someone is paying for that university, and that shows up in GDP.

    • Andrew M Garland says:

      () Do you have a better measure of wealth production?

      () GDP is measured by governments. I am happy to disregard GDP as the flawed output of biased politicians, along with all of those other government programs such as social control and insurance mandates.

      () Marriage and divorce are highly controlled contracts. The difficulties of divorce are mandated by countries. Divorce lawyers must be useful because they are so expensive. Divorce may be wasteful, but it seems to be better than the available alternatives. Getting through divorce is indeed a form of production.

      () I am amazed that you think store security is a waste. If so, then it is again the fault of government and law, which requires a useless show of security by the store to avoid having their property sued away from them.

      Or, store security is defending the store from robbery and theft, is cheaper then the alternative, and is part of completing the productive delivery of goods to customers. So, it is a service which is validly part of GDP.

      When you are discussing something, and your respondent says to you “Everyone agrees that (such and such)”, what is your opinion of their presentation?

  6. Dennis Byron says:

    And if the Patient Protection and Affordable Care Act of 2010 completely follows Massachusetts’ RomneyCare trend line beginning with its passage in 2006, PPACA will be effectively repealed totally in 2016, six years after it was passed, because RomneyCare was effectively repealed (its market orientation was replaced with Soviet-era-type price controls) in 2012–see Note.

    However to be fair, after its 2006 passage RomneyCare was substantially amended legislatively once in 2008 and twice in 2010, prior to its effective 2012 legislative repeal. We already can see that PPACA is not following this trend… depending instead on amendment by royal decree. And also to be fair, in Massachusetts we already had guaranteed issue and about 90%-95% of us (depending on whether you use the U.S. Census or Massachusetts Health Insurance Survey) already had insurance or Medicaid before RomneyCare.

    (NOTE: RomneyCare was effectively repealed in 2012 as described above but the employer mandate was not actually repealed until 2013. Most of RomneyCare’s other key aspects were overridden by PPACA, particularly the one good thing RomneyCare did, which was to merge the small business and individual markets in Massachusetts.)

  7. Bob Hertz says:

    Note to Andrew Garland:

    You raise some good points.

    I made my statements about GDP from what I confess is the evidence of my senses, rather than economic principles.

    It is impossible to walk around a larger American city and then walk around Hamburg Germany, and then accept the statistic that the American city is richer.

    Almost all German workers have six weeks paid vacation, taxpayer funded universities and taxpayer funded long term care. If they are unemployed they receive rent subsidies, utility payment subsidies, etc.

    Grinding poverty exists only in the immigrant enclaves. Average citizens have enough disposable income to take far more foreign trips than average Americans.

    This is covered in a fascinating and balanced article called “Why I’d rather live in the US than Europe.”

    I might be mixing apples and oranges here, and I do not mind your telling me so. But the GDP numbers just do not sit well with me.