Obamacare Schadenfreude at the Cliff Edge

Not surprisingly most of the Obamacare Schadenfreude for today consists of Republicans yelling "Job Loss!" and Demcrats whining "But.... Job Lock!"

Watch Out for Obamacare's Subsidy Cliff: Earn $1 More in Wages, and You Could Pay $20,000 More for Insurance

For some people, CBO notes, the incentive to reduce their hours or quit their jobs will be especially strong: "People whose income exceeds 400 percent of the FPL are ineligible for premium subsidies, and for some people those subsidies will drop abruptly to zero when income crosses that threshold."

The Obamacare subsidy cliff is so steep that if you earn just $1 above the threshold, you could end up paying anywhere from a few thousand dollars to $20,000 more for insurance, depending on your age.

Take the case of a couple of 55-year-olds living in St. Croix County, Wisconsin, where the median household income is a little over $68,000.

Let's say that they earn $62,040 in 2014. They would pay $211 per month for the cheapest Obamacare plan available on healthcare.gov But if they earn $62,041--just one dollar more--they would pay $1,342 per month. That's an extra $13,572 per year for the same bare-bones insurance plan:

This is one of the more aggravating facts of all kinds of government benefits; arbitrary cutoffs for benefits that produce real, and large disincentives for people to climb out of poverty.  Keep you income below a certain amount and reap in the benefits, exceed them by a single dollar and lose them entirely.

We have this thing called mathematics; we can calculate formulas by which to implement subsidies so that they decline slowly with income, and never create a cliff.  Why do we not use these?  Are bureaucrats too stupid to understand how they work.

Obamacare’s Attack on the Work Ethic

There is a point in almost every debate at which the losing party recognizes its predicament and concludes that its only remaining play is to try to corrupt the language. In Texas, pro-choice hero Wendy Davis has begun, risibly, to describe herself as “pro-life”; in his second inaugural, President Obama cloaked the most ambitious statist agenda in a half-century in the patois of limited government and rebellion; and, in my own country of birth, authorities that lock people up for speaking do so in the ostensible name of “respect.” If you can’t beat ’em, confuse ’em.

Yesterday morning, Obamacare’s beleaguered partisans got in on the act, too. Responding to a CBO report that suggested the law would encourage more than 2 million people either to seek less work or to leave the labor market completely, progressives picked up their tricornered hats and their muskets, and started to shout incoherently about “freedom.” In a lovely illustration of the truism that progressives really haven’t the slightest clue what it is that conservatives believe, theHuffington Post’s Senior Congressional Reporter, Michael McAuliff, spoke for the cabal, suggesting ludicrously that,

There’s an irony in the GOP complaining that ACA lets people quit jobs. I mean, what’s wrong with freedom?

Your freedom ends where you start holding a gun on someone else to pay your bill, or when you have the government hold the gun for you.

And that's why Obamacare causes people to leave the workforce (or to keep Glen Kessler happy, reduce their hour worked.  By taking money from people to work full time, and subsidizing people willing to cut their hours and live on less of their own income, and more of the workers, they government has increased the freedom for one group by having stolen from another.

Obamacare Jobs Plan—Tune In, Sign Up, Drop Out

“This is about giving Americans more choices,” said Gene Sperling, the director of Obama’s National Economic Council to CNN on Tuesday. “These people who are working more than they want to simply for healthcare, some of them will have the option of working a little less.”

However, Democrats had a little difficulty keeping that talking point about FTEs and not equating actual jobs and people in line with this defense on “choice.” Senate Majority Leader Harry Reid also argued that the report offers hope for people to become “free agents” and avoid “job lock.” Aaron Blake reported on Twitter that Reid’s fellow Democrats on Capitol Hill associated that directly with the FTE figure from CBO: “New line from Dems on CBO report: It "will enable more than 2 million workers to escape 'job-lock.'”

Yes, back before we retired, we had "job lock" for health insurance; an unwillingness to risk changing jobs because of health care concerns, but we also suffered "job lock" because of food (eating is good), shelter (it's nice to have a home), "job lock" for energy (it's less comfortable to have a home without heat and lights), and even "job lock" to keep the boat and it's associated expenses, but most of all we had "job lock" to save up enough money for a comfortable retirement. The ultimate goal of the Obama administration and the democrats is to free us from all lock, to the extent that they can persuade the Chinese to pay.  The Chinese should be pretty willing, given that one of the first things the administration would do away with to pay for it all, if they had their own way, would be the defense budget, giving the Chinese free reign.

Obamacare Demonstrates What the Democrats Really Want

So let’s walk through the latest pushes in policy from the Democrats and see if there’s a common theme:

• Extension of Unemployment benefits has been shown to increase unemployment
• Increasing the minimum wage will reduce the pool of jobs available
• Elimination of minimum wage jobs reduces the opportunity to build job experience for young workers.
• Income inequality has increased more under Barack Obama than the last 3 presidents.

It is important to judge them not by their flowery words about income equality, but by the results of their policies.

A Certain Meanness of Argument, A Certain Superiority of Fact

I wrote yesterday about my frustration with the various liberal responses to the Congressional Budget Office’s take on Obamacare and workforce participation, but this piece, from the sensible-centrist Ron Fournier, is actually much more exasperating:

The biggest “disincentive for people to work” is not Obamacare. It’s the lack of jobs in a fast-changing, post-industrial economy that’s leaving millions of Americans behind.
… The Affordability Care Act is far from perfect. It needs to evolve with bipartisan thinking. But it’s at least a step toward recognizing that the employee-based insurance system built for the 20th century is inadequate for this one.
Rather than an honest debate about the future of the U.S. health care system, the conversation in Washington has been derailed by the Republican Party’s cynical interpretation of a Congressional Budget Office analysis.
…. CBO Director Douglas Elmendorf, speaking in bureaucratic-ese, told Congress that Obamacare “creates a disincentive for people to work.”
Cue the outrage. Republicans initially twisted the analysis to suggest that Obamacare would throw 2 million people out of work. Quickly proven wrong, they shifted their attack. They warned that millions of lazy, unmotivated Americans would take advantage of the law to live on the government dole.
The GOP argument takes a dim view of Americans. It assumes that the only reason millions of people work is for company health care insurance—that there is no inner drive to ascend economically and socially. Give me a government check and to hell with the American Dream.
That may be true for some Americans, but certainly not for most. The GOP argument has more than a whiff of Reagan-era racial “welfare queen” politics.

So let’s follow the logic here. The biggest obstacle to full-time work right now is a lousy post-Great Recession recovery and an economy that’s tough on the less-educated … so therefore we shouldn’t careat all about what further disincentives to low-wage work public policy might add? The Affordable Care Act isn’t perfect and needs to “evolve” through “bipartisan thinking” … but it’s a “cynical” derailment for the opposition party to actually highlight what might be a pretty significant imperfection? The Congressional Budget Office explicitly says that the law’s provisions will “create a disincentive to work” … but if Republicans say it, they’re taking a dim view of their fellow citizens and hating on the American Dream? When the C.B.O. director says something, it’s “bureaucratic-ese” … but when the G.O.P. says exactly the same thing, it’s thinly-veiled racism?

Come on.

And about that welfare debate. Yes, absolutely, conservative arguments about welfare policy do not exactly assume the sunniest possible picture of human nature. But neither do they necessarily assume that all poor people are all unmotivated, un-American idlers: Often, they just assume that the poor are like most people — they respond to financial incentives, they change their behavior when those incentives change, and poorly-designed incentives can encourage short-term decisionmaking that doesn’t always redound to their long-term benefit.

Indeed, people for the most part are like animals according to the Optimal Foraging Theory:

Optimal foraging theory is an idea in ecology based on the study of foraging behavior and states that organisms forage in such a way as to maximize their net energy intake per unit time. In other words, they behave in such a way as to find, capture and consume food containing the most calories while expending the least amount of time possible in doing so. The understanding of many ecological concepts such as adaptation, energy flow and competition hinges on the ability to comprehend what food items animals select, and why.

Both employment and government subsidies are available resources.  Given a choice between a 40 hr a week job, and filling out a government form for a subsidy, it should surprise no one that many people chose to fill out the form.

But saying people behave like animals, that's racist, right?

Reading Is Hard. Calling People Racists On Twitter, Though, Is Easy

...Never mind that all this workforce-fleeing is happening in the middle of a major “income inequality” class warfare push by Team Obama. Just set that all aside. After writing a weak, pooh-poohing column on the original report, National Journal’s Ron Fournier comes out with a new column today. He pushes it out at 9:05 AM, 9:06 AM, 9:06 AM again, 9:07 AM, and9:09 AM before hitting on this winning tweet a minute later:

...Yes, if you believe it’s racist to say that people on welfare should work, you will probably be comforted by the soothing words of Fournier and be reassured that your political opponents don’t need to be listened to because they are pure evil. I’m not much for that political game, but it does show how groupthink about Republicans being racist spreads.

Unfortunately what gets missed in the fun game of “You’re a racist for disagreeing with me!” is a discussion about how much people should be forced to subsidize the lives of others, whether entitlement programs that disincentivize labor are healthy for individuals or society, whether the explosive growth of disability rolls can be sustained and so on and so forth.

 Liberal media, needles to say, is not happy with the way the story is being played up: Why the press is botching the latest Obamacare story

Because they don't say what you want them to say?

The thing that grabbed everyone’s attention, though, was the conclusion that the law will induce millions of people to either leave the labor force or cut back on their hours. But here’s the thing: The implications of that finding are at worst contestable. Most people would agree that it’s not a great thing if people who want to work more decide not to because their insurance subsidies would drop too much to make the cash income worth it. But most people also probably think it’s a great thing if people in their early 60s can retire early, or people in their 40s can start a business, or people in their 30s can raise their kids at home because they’re no longer locked into their jobs for the health insurance.

Sure, if you give everyone their food, housing, shelter, energy and health care (just to name a few), a lot of them won't work. But who's going to produce the food, housing, shelter, energy and health care, if everybody gets it free?

OK, OK, just a single story on how four states managed to fail the Obamacare challenge.

Oregon

The Oregonian newspaper has done a great job chronicling the unfolding disaster withCover Oregon. The state is the only one in which no one has been able to enroll using the website. In an article last month, the newspaper reported that a technology analyst at Oregon's Department of Administrative Services warned last May that managers at the exchange were being "intellectually dishonest" in claiming it would be ready Oct. 1. 

Minnesota

Blame is being spread around in Minnesota, where the MNsure exchange is sputtering and its call center is unable to keep up with demand. As news site MinnPost reported last month: “The vendors are blaming the state. Gov. Mark Dayton and state officials are blaming the private companies who built the faulty technology, and MNsure leaders are quick to point out that they weren’t around when controversial decisions were made. Republican lawmakers, meanwhile, are saying that the governor needs to take responsibility for the project.” 

Massachusetts

In many ways, Massachusetts should have been a leader in setting up its own exchange. After all, its 2006 health reform law signed by then-Gov. Mitt Romney has been cited as the model for Obamacare. But the state’s exchange, the Massachusetts Health Connector, has fumbled. The Boston Herald reported last month that, “State officials overseeing the Health Connector website knew as early as February 2013 — some nine months before launch — that parts of the $69 million Obamacare gateway would probably be delayed, public records obtained by the Herald last night revealed.” 

Maryland

The Maryland Health Connection, like the exchanges in other states, knew well in advance that it wasn’t ready to launch, but the problems weren’t fixed in time. The Washington Post reported last month how “senior state officials failed to heed warnings that no one was ultimately accountable for the $170 million project and that the state lacked a plausible plan for how it would be ready by Oct. 1.”

All blue states.