“personally have some problems with the basic assumptions underlying this analysis, mainly the claim that every dollar provided to employees as a health insurance benefits results in an equal value reduction in salary.”

As a general assumption, it clearly is false. It probably is true when the economy is at full employment, where workers are in a position to ensure that a loss of benefits is made up for by a hike in wages. But when there is a lot of slack in labor markets, and worker compensation only falls slowly due to wage-stickiness, employers turn to cuts in benefits with impunity.

So I guess, from an econ-speak pov, labor markets find their new “equilibrium” in a slump not thru wage cuts, but thru benefit cuts – i.e. cuts in health insurance. Which means the economy may find its way back to full employment faster if employers dump the costs of health care onto workers. Of course workers will be that much worse off, but who cares about workers. As long as “The Economy” is happy…

I also disagree with the assumption that the drop in benefits will result in higher taxable wages. If companies are positioned to offer higher wages to keep or attract more employees, they’ll do it. But if the company needs the savings gained by dropping health care to maintain profitability, I wouldn’t expect them to pass those savings on to the employees through higher wages. Just not gonna happen.

Pass that cost on to the slave. Meanwhile America will waste at least a
$$billions dollars$$ worth of economic value, out the collective auto tailpipe, today.

What is wrong with this picture? Maybe the monies squandered by Americans going to work could be used more effectively? Like to pay for healthcare and and education opposed than wasting money out the tailpipe. America you have been raped…..

Even if they are wrong about dollar for dollar increases in worker compensation to offset loss of health coverage (and I share your skepticism here), given that employee health coverage is tax deductible for the companies, it would result in a net increase in corporate taxes.

Did they factor in the loss of tax revenue from all the dead employees who no longer have health care?

I fully support your pessimism about the passthrough of salary increases in lieu of medical benefits reductions by employers. In this deep recession begging for peanuts from the rich puts the employee in a rock and hard place sandwich. People over 50 and those in mid-level positions are afraid of the 25-30 yr. old willing to do almost anything, including working with lousy health benefits, for a decade to get into the job market and stick there. The CBO’s crystal ball contains nothing more than smog here. Smog, of course, in this situation being smoke blown up the middle class’s nether parts and fog from our latest wizards of ooze inside the beltway.

In contrast, the scenario with the largest reduction in employment-based coverage actually lowers the cost of the ACA to the federal government relative to the baseline projections because the extra costs for Medicaid and exchange subsidies are more than offset by the increased revenues resulting from higher taxable compensation among workers who receive higher wages in lieu of health benefits.

one of the most REDICULOUS claims I have EVER seen

employers do NOT raise wages because their costs are lower, they POCKET THE MONEY until there is labor pressure (more jobs then laborers)

this is STUNNING misrepresentation of what would actually happen which is as follows;

“we are discontinuing your health insurance and you can get it from the government, we are NOT raising your salary because there are too many qualified workers just waiting for your position”

even IF the company raised wage for that person when they reduced health care (perhaps they wouldn’t want the expense of trainings someone new) , THEY WOULD HAVE TO RAISE WAGE LOWER THEN THE AMOUNT THEY SAVED otherwise there is no reason for them to make the exchange

PLUS when there was a need for a different worker, THAT person would NOT get the raise they gave the first person to avoid training expenses

it’s just a mindless claim that is actually promoting “trickle down” economics and it is obsurd

Hi Jon,

I think you should look at this story about the CBO sure gives some context to the above BS from them. Be nice if you could post it. This is the kind of thing that needs exposure not their lies

http://www.zerohedge.com/news/terminated-cbo-whistleblower-shares-her-full-story-zero-hedge-exposes-deep-conflicts-impartial-

About 11 million people who would have had an offer of employment-based coverage under prior law will not have an offer under the ACA. That estimate represents about 7 percent of the roughly 161 million people projected to have employment-based coverage under prior law.5 The businesses that choose not to offer coverage as a result of the ACA will tend to be smaller employers and employers with predominantly lower-wage workers; those workers and their families are more likely to be eligible for Medicaid, CHIP, or subsidies through the health insurance exchanges.

Ouch

Thanks I don’t always agree with 0hedge but they do some good reporting. cbo just another taxpayer owned govt office the a shill for ws.

I love the part irs will collect more taxes, ya from the worker but nothing from tax dodging corp. Amerika.

This is a true question: What about the impact on individual insurance pricing by the move of all those people formally in lower risk group plans & thus lower premiums to the more public individual pool??? Seems this could lower premiums for all also.

x2

The reduction in any employee benefit cost never goes to the employee, while any increase is used as an excuse to avoid raises and indeed justify lower salaries or employee count.

So the extra taxes expected from folks paying the employee 25% FIT on all that new income will really be taxes at a 7% rate on the internat’l corps earnings (the corp 35% after some “financial engineering”) with a minor part at the domestic corps tax rate.

And now we’re supposed to accept the CBO as impartial when another posting here, concerning its mendacity in reporting foreclosure fraud, shows how that vaunted reputation is a myth.

I guess this makes sense, in the same way that letting bridges collapse from disrepair might lower our dependence on oil.

Based on the news re: CBO’s failure to acknowledge the extent of the fraudclosure crisis, and now this slappy-happy-fairy-dust bullshit that employers will raise employee wages when they cut their health care benefits; it’s becoming more and more apparent that NO ONE in Washington is looking out for the 99%. If the CBO is corrupt, everybody is corrupt.

I find something infuriating about the idea that “deficit reduction” is the big selling point of the health care law. How about are our premiums going to be less? Will meds be cheaper? Is government using its power to end price gouging? No, of course not. The good news is the government will be “off my back” (providing less service) but will be retained as leg breaker/bill collector for the medical cartel. And deficit reduction, assuming this is the actual result, benefits me how?

I personally have some problems with the basic assumptions underlying this analysis, mainly the claim that every dollar provided to employees as a health insurance benefits results in an equal value reduction in salary.

Indeed. My company pays about $100 @ week towards our health insurance, (which epically sucks). But, I get mine through my wife’s employer, (this only sucks big time). The chances of me getting a $2.50 @ hour raise in lieu of that coverage couldn’t be accomplished even if I took my supervisor hostage with my underwear full of Semtex. :) If they gave up providing insurance, the vast majority of employers would just pocket the difference.