How Obama Care Will Tax the Poor

Gene Steuerle, in his most recent "The Government We Deserve," has this to say:

  • The Urban Institute analysis of the Clinton health plan in 1993 concluded the plan would impose large costs on low-income households.
  • Obama is about to repeat that outcome: Mandating that employers provide, say, a $10,000 family policy imposes a cost of more than $5 an hour (the minimum wage is $7.25).
  • Economic theory teaches that this burden falls squarely on the shoulders of workers, if they're lucky enough to keep their jobs.
  • Exempting small businesses will encourage large companies to contract out low-pay work to small firms and independent contractors – leading to a two-tiered, have and have-not labor market.
  • Since many of these employees have access to Medicaid and free care, worth say $4,000, they will be forced to pay $10,000 for a net benefit of $6,000 – resulting in an implicit tax of at least $4,000.

Comments (3)

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  1. Greg says:

    Another excellent post. Health reform is going to harm the most the very people it purports to help.

  2. Neil H. says:

    This is amazing. What percent of the people getting screwed do you think were Obama voters?

  3. Larry C. says:

    Neil, I would guess 85% to 90%. Hard to feel sorry for them isn’t it?