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Obamacare’s ‘Perverse Incentives’

6:05 PM, Oct 31, 2012 • By JEFFREY H. ANDERSON
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In today’s Wall Street Journal, David Gamage — who teaches at Cal-Berkeley, worked for two years in the Obama administration, and regards himself as “an Obamacare supporter” — discusses “the perverse incentives” that Obamacare would provide to employees, employers, and romantic couples, alike.

health care

He writes:

“Consider a low-income American supporting a family of four deciding whether to take a part-time job that pays $36,000 a year or a full-time job that pays $42,000 a year.  According to my research, accepting the higher-paying job could result in the family losing over $10,000 a year in health-care subsidies.

“Moreover, by switching low-income employees to part-time positions [defined under Obamacare as positions in which an employee works less than 30 hours a week on average], rather than offering them health insurance, an employer will be able to save over $3,000 a year by avoiding ObamaCare’s employer-mandate penalties….The losers will be taxpayers, who will need to fund the subsidies that these employees will be eligible for.”

Gamage continues:

“ObamaCare’s new subsidies may also create penalties for marriage and incentives for divorce….

“Consider a couple with children in which one of the parents earns most of the family’s income. If the couple marries, the family would lose thousands of dollars of subsidies that could otherwise be used to pay for health insurance for the children and the lower-income spouse.”

Perhaps partly to avoid being run out of Berkeley on the rails, Gamage nevertheless opposes repeal, essentially saying that something is better than nothing.  He writes that “Republicans want to repeal the law and replace it with something new.  But what?”  In answer to that question, here are a couple of suggestions — one longer, one shorter.

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