The Employer Mandate is Postponed: What Does This Mean For Obamacare? Is Ezra Klein Right–Should the Employer Mandate Be Repealed?

The administration has announced that employers with more than 50 employees will not be required to offer insurance to their employees until 2015.

Originally, reform legislation said that these employers would have to offer affordable, comprehensive insurance next year—or face penalties of $2,000 to $3,000 per worker

                              Proof that Obamacare is Not Working?

Without missing a beat, Republicans have stepped forward to say that the delay is evidence that Obamacare is faililng.

What they apparently doesn’t know (or doesn’t want you to realize) is that a delay in  the employer mandate will affect only a fraction of employers, and very few employees

First, the majority of large companies already offer health insurance that includes the benefits that the Affordable Care Act labels “essential.” (The only exceptions tend to be large restaurant and retail chains)

The mandate will have the biggest impact on small companies that today, may offer insurance, but often don’t provide “comprehensive” coverage. The postponement means that these firms will have another year to think about whether they want to expand coverage—or pay a penalty,

But their employees will not be hurt by the delay.  If either a restaurant chain or a small firm doesn’t offer benefits next year, both full-time and part-time workers be able to buy their own coverage in the Individual Exchanges where the majority will be eligible for generous tax credits. The coverage available the Exchanges will be just as good as the insurance their employers will be required to offer in 2015.

As former White House health policy adviser Zeke Emanuel pointed out today on MSNBC’s “Morning Joe”:  “The delay of implementation of the employer mandate will impact a limited number of companies. I actually don’t think this is that big a deal,” .

Emanuel went on to point out that the “the provision only applies to employers who have 50 or more employees. He estimated that there are ibkt  200,000 total employers in the U.S. [who would be] impacted and that “94 percent already offer health insurance” to employees.

Emanuel’s estimate may be high: “You’ve got 5.7 million firms in the U.S.,” says Wharton’s Mark Duggan, who served as the top health economist at White House’s Council of Economic Advisers from 2009 to 2010. “Only 210,000 have more than 50 employees. So 96 percent of firms aren’t affected.

“Then if you look among those firms with 50 or more employees, something on the order of 95 percent offer health insurance. So it’s basically 10,000 or so employers who have more than 50 employees and don’t offer coverage. Those companies probably employ around one percent of American workers.”

 To Judge the Success of Obamacare , Don’t Over-React to Day by  Day Headlines

Emanuel  also urged taking a long-term view of what the Affordable Care Act is going to accomplish, saying: “We need to look for 2020 rather than moment to moment for changes in the system.”

I couldn’t agree more. Reforming U.S. healthcare is an enormous undertaking. As I have said in the past, it will be a process, not an event. Along the way, there will be glitches. Each time, reform’s opponents will jump up and down, insisting that the End is Nigh. Obamacare is dead.  We must  ignore them—take the long view, and forge ahead.

I am hopeful that by 2020  reform’s goals will be realized. Even then, we will continue to modify and improve reform legislation over a period of years, just as we have revised Medicare.

The notion that we must “rush” to implement every aspect the ACA is misguided. When attempting to enforce the employer mandate, an emphasis on “speed” could lead to the “train wreck” that Republicans predict. 

What is crucial is that the “Patient Proteciton and Affordable Care Act” protects as many  Americans as possible, as soon as possible, while making medical care affordable by giving those who must buy their own insurance the subsidies they need. In 2014, this will be happening.

In the meantime, we already have begun to rein in health care costs, slowing healthcare inflation from 7% or 8% a year to roughly 3%. This is only a start, but a very good start.                               

                         How Will the Delay Effect the Mid-Term Election?

Predictably, some conservatives are crowing that the delay represents a “huge set back” for Obamacare. “The Obama administration has undermined its sole claim to greatness and delivered a blow to Democrats on the ballot in 2014,” writes Washington Post conservative columnist Jennifer Rubin. /

 In truth, this is far from a major setback for reform. Apparently Rubin doesn’t realize how few employers will be affected, and perhaps she doesn’t understand that without the employer mandate, even if these employers don’t offer benfits, the majority of their workers will be eligible for tax credits in the Indivudal Exchanges,

As for the effect on candidates running in 2014, even Fox News recogizes that Republicans, not Democrats are most likely to be hurt. 

 

In a piece headlined: “Move to delay ObamaCare employer mandate could upend Republicans’ 2014 strategy ” Fox  explains: “ President Obama’s decision to push back key provisions of his signature healthcare law amid growing concerns it isn’t ready for prime time could take a key issue away from Republicans in next year’s midterm elections.

“The announcement Tuesday night that the mandate for many small businesses to provide health insurance to employees will be delayed by one year was hailed by business leaders and seemed to acknowledge Republican claims the plan would hurt – or at least confuse – business. But it also likely undercuts Republican plans to make ObamaCare the centerpiece of their midterm elections strategy.”:

Note that FOX also admits that the employer mandate may not “hurt” businesses but simply “confuse them.” The administration has said that this is one reason for the delay: It  hope to streamline the paperwork that will be required.

In 2015, When the Mandate Kicks In, Won’t Small Business Owners Cut Employees’ Hours?

Those who argue that the employer mandate is going to kill jobs say that this is one reason why it should be  repealed.. Since the law stipulates that employers must offer benefits to “full-time workers”—and defines full-time as those who work 30 hours a week—the mandate’s critics predict that businesses will begin cutting employees hours back to less than 30 .

As I explained in a recent post, what the critics don’t seem to understand is that the ACA requires that employers offer health benefits if they have “30-time full-time employees or full-time equivalents.”  Two workers who put in 15 hours a week equal one full-time equivalent.  In other words, the government doesn’t count heads, it counts hours. To figure out how many “full-time employees and full-time equivalents” a business owner has, the government will add up the hours that all of his employees work, and then divide by 30.

The employer who cuts 12 of his 40 full-time employees to part time, and hires another 12 part-time employees to fill in the holes in his work schedule will wind up with  28 full-time workers and twelve “full-time equivalents.”

He won’s have to insure the part-time workers, but he will be required to offer  benefits to the 28 who actually work 30 hours a week.

Conceivably, an employee coul slash everyone’s hours to part-time, firing those who are not willing to accept the cut. Then, he wouldn’t have to offer coverage to anyone.

But consider what this would do to productivity and morale—not to mention customer service.

How many of his best workers would begin looking for a new job? How much would it cost him to train the new part-time employees? How many of his remaining full-timers would be enthusiastic about training the Newbie part-timers?

Does this sound like a brilliant business plan to you?

                            Wal-Mart Vs. Target

Granted some large retail and restaurant chains are threating to reduce employees’ hours. Wal-Mart is leading the way. It has stopped hiring full-time employees, and is relying on part-timers and temps. But as a result, Forbes reports that Wal-Mart is experiencing  “complaints about understaffed stores with empty shelves and inventory piling up in warehouses and back rooms.” “It seems even Wal-Mart can’t operate on such a lean staff . . . .Dirty stores, parking lots in disarray and out-of stock products don’t bode well for sales and stores can’t operate that way for long periods.”

Meanwhile, Target, one of WalMart’s chief competitors, continues to offer health care benefits to part-time employees, even though the ACA doesn’t require that it insure them.

                     Shifting Costs from the Private Sector to the Government

For the Democrats, I see only one downside to the delay. If employers don’t offer benefits next year, and their employees go to the Individual Exchanges to purchase insurance,  the government will have to pick up the tab for that many more subsidies. (On the other hand, since many people who work for chains or small companies are young this could mean that more 20-somethings and 30-somethings will join the insurance pool in the Exchanges, lowering the cost of insurance.)

Nevertheless, it is worth remembering that when businesses sponsor health insurance, the average small company pays 65% of the premium while large companies typically lay out 75%. Their contribution is substantial, and at this point, as we strive to move toward universal coverage, the public sector  (i.e. taxpayers) need that help.

Conservatives argue that the private sector’s contribution to the cost of healthcare acts is a drag on economic growth and goes a long way toward explaining why the average worker’s wages have stagnated for most of the past 30 years. Businesses spend so much on benfits that they cannot afford raises.

What this analysis ignores is that the workers who have watched their real wages flatten or fall over the past 30 years  are not the ones receiving health benefits. Imagine a 5-step income ladder. Today, only  20% of those on the bottom step are offered health insurance at work—down from 38% in 1978. The cost of health benefits does not explain why, over the past three decades their total wage have fallen by 0.7%. 

 Similarly, since the late Seventies those on the second step from the bottom have seen their wages edge up by a measly 2.2%. Meanwhile only 43% receive health benefits– down from 60% in 1978.  Once again, the cost of medical care  does not begin to explain why they have received such niggardly raises–especially during a time when productivity has increased.

By contrast, 76% of Americans on the top step of that five-step income ladder now have employer-sponsored insurance.  Granted in 1978 nearly 90% enjoyed benefits. But today, their employers are still laying out a substantial sum for medical care while simultaneously handing out raises that have hiked the real income  of those at the top by an average of 33%.

Over the past 30 years hard-headed businessmen have  raised wages for middle-income workers only when they felt that they must. Most of the time they have felt little or no pressure to lift salaries. Unions had lost their power, and unemployment has been high enough at various points during the past three decades that insecure workers have not demanded better pay. They’re “working scared.”

             Moving Away from Employer-Based Health Benefits

At some point in the future we may well want to move away from employer-sponsored health insurance, 

But  we will have to figure out how to ensure that the private sector contributes to the cost of universal healthcare—perhaps by raising corporate taxes and ear-marking the funds for healthcare subsidies for the middle-income and low-income Americans. .

Conservatives and libertarians ask: Why should employers bear part of the cost of universal health care?

All employers benefit when the nation’s workers are healthy

 Moreover it is not fair if some businesses share in the responsibility of supporting “health care for all” while competitors enjoy a “free ride.”

 Ezra Klein: The Employer Mandate Should Not  Be Delayed; It Should be Repealed.

In 2009 the Washington Post’s Ezra Klein argued against the employer mandate. At the time, he quoted the Center for Budget and Policy Priorities (CBBP):,  

“Employers would have strong incentives to tilt hiring toward people who have a spouse with a good income (or have health coverage through a family member), teenagers whose parents make a decent living, and people without children (since the eligibility limit for the subsidies in the new health insurance exchanges will increase with family size). Low-income women with children in one-earner families would be particularly disadvantaged” because they would be most likely to go to the Exchange and receive a subsidy, triggering employer penalities.

“This would also happen on the back end,” Klein  aruges. .Again he quotes CBPP:  “The employer mandate and penalties ‘would likely influence employer decisions about which of their employees to let go when they trim their workforces to cut costs, such as during a recession’ Workers from low-income families would cost the firm significantly more.”

Yesterday Klein repeated the argument, writing that “Eliminating” the employer mandate, “or at least utterly overhauling it is probably the right thing to do.”

I disagree. I admire both Klein’s Wonkblog and the CBPP, and applaud most of what each have written about health care reform.

But in this case the argument is based on the false assumption that employers will choose to pay a penalty of $2,000 to $3,000 per employee  rather than provide insurance. 

What both Klein and CBPP overlook is what  Klein himself has explained in the past:

“People simply misunderstand why employers offer health-care benefits. They’re not doing it as a favor to employees. .  .  Employers offer health insurance because employees demand it. If you’re an employer who doesn’t offer insurance and your competitors do, you’ll lose out on the most talented workers. An employer who stopped offering health benefits would see his best employees immediately start looking for other jobs.”  

 Research also shows the health benefits improve productivity and reduce absenteeism.As I  pointed out:  not long ago:: “This explains why 95% of employers with more than 30 workers offer insurance.”

Under the Affordable Care Act small businesses will find that insurance is far more affordable because they will be eligible for “large group” rates. Typically these premiums are 18% lower than the  rates  insurers charge small groups. Many small businesses thatwanted to offer coverage in the past now will be able to do it./

Some employers already have stood up to say that they plan to use Obamacare to strengthen their position in the market where they compete for employees. Recently the Cumberland Farms convenience-store chain announced that it will make an additional 1,500 employees eligible for employer-sponsored health insurance by classifying them as full-timers before ACA kicks in January 1.

“We could have pushed everybody [now working] under 40 hours below 30,” said Ari Haseotes, president and chief operating officer of the company’s Cumberland Farms division. Instead, “we’re making a proactive effort here to go above and beyond, and clearly differentiate ourselves in the job market as a place to come to work.”

Cumberland Farms will have little reason to avoid hiring those single mothers. Very likely they will prove to be extremely loyal, hard-working employees.

36 thoughts on “The Employer Mandate is Postponed: What Does This Mean For Obamacare? Is Ezra Klein Right–Should the Employer Mandate Be Repealed?

  1. The employer mandate is a significant issue for the low wage industries if restaurants and bars, retail trade and hospitality which, combined, employ many millions of people. There are also lots of relatively small manufacturing and service firms that either can’t afford to offer health insurance or offer a benefits package that doesn’t measure up to the essential benefits standard in the ACA. Wages are often relatively low in many of these firms, in part, because the cost of living where the companies are located is also pretty low, especially for housing.

    At the same time, health care costs are often quite high even where other living costs are low by national standards. The upshot is that the hourly cost of offering a health insurance plan that complies with the law might be 20%-30% of the wage the average employee at such firms is paid. It would not be surprising if many of these employers opt to pay the penalty instead of offering insurance.

    In some industries, there is also the issue of workers who work full time but only on a seasonal basis. It’s not clear whether they would be defined as full time or part time for purposes of the insurance mandate. There is a lot that needs to be sorted out here. In the meantime, the Obama administration his fellow Democrats will benefit from kicking the issue past the 2014 congressional elections and not have to deal with it during the campaign season.

    • Barry–

      If Target can afford to pay for Health Insurance, and Cumberland Farms can afford to pay for health Insurance, so can Wal-Mart

      Wal-Mart is doing better than the others. But historically, Wal-Mart has always treated its employees badly—-which is why workers have threated a nation-wide walk-out.

      To find out how Wal-Mart treats its employees read the excellent book Nickled and Dimed. Also, Google “Wal-Mart” and illegal immigrants. (In order to save money Wal-Mart purposefully hires subcontractors who use illegals to clean its stores.)

      The chain restaurants also are notorious for using and underpaying illegal dishwashers, etc. It will be interesting to see which chains decide to offer insurance and which ones don’t.

      I think Cumberland Farms is right: those that offer insurance will get the top employees.
      At Wal-Mart and some chain restaurants, customer service will suffer.

      Some customers have threatned to boycott chains that don’t offer insurance.

      As far as small firms “not beging able to afford insurance” the majority of firms with more than 50 employees do provide benefits.
      Those that don’t are simply “free riders”– their competitors offer insurance and often wind up insuring one of their employees through a spouse. If all companies offer insurance this levels the competitive playing field.

      On the question of Seaonsl workers: The ACA makes a special provision for employers with seasonal workers. (Off the top of my head I can’t remember the details, but it works.)

    • The ACA is having an unexpected effect on higher education.

      The IRS has ruled that adjuncts, that is part time faculty, are evaluated by a ratio to determine whether or not colleges have to offer them health care benefits. This ratio is used because adjuncts are typically paid by the credit hour or the length of the course in weeks rather than punching a time clock for the hours actually worked.

      My college is responding by restricting heavily the use of adjunct faculty (I teach in a community college). That’s causing problems with having enough clinical staff: we use mostly part timers to teach students in clinic. Clinic hours are pre-set: either 12 hours or 16 hours per week, depending on the course. They have no other duties beyond the clinical hours. But they still fall under the ratios, and administration doesn’t want to offer benefits to our part timers.

      Maggie, maybe you can answer a question: I thought part timers had to be OFFERED benefits, but they could be declined. My supervisor says they have to be paid even if they get benefits from their full time jobs. Who’s right?

      I am wondering how this will affect full colleges and universities who have been replacing tenure track positions with poorly paid adjuncts who get no benefits at all.

      • Panacea–

        Good to hear from you.

        No, the Affordable Care Act doesn’t require that employers provide health benefits to
        part-time employees (That never would have gotten through Congress.)

        But here is the good news: the Affordable Care Act protects part-time employees by providing subsidies (in the form of tax credits)
        that will help them pay for insurance
        .

        Beginning in January 2014, part-time employees can go the individual
        Exchanges where most will be eligible for very generous government tax credits that will make insurance
        affordable. (Most part-time employees earn less than $45,500 a year, which means they will qualify
        for the subsidies.)

        The subsidies will be as good or better than what many colleges might have contributed to their insurance

        And the insurance will be much better because deductibles and co-pays will be capped, preventive care will be free (including contraception),and total out-of-pocket spending will be capped.

        Show me a university health care plan that meets these regs. (A few do, but not most)

        • College and university professors in North Carolina are covered by the State Teacher’s Plan. While not as good as it used to be, it’s pretty decent. I haven’t heard that our plan will be changing under the ACA.

          But there is a lot of confusion about the part time business. My supervisor assures me our part timers MUST take insurance. I keep telling her she’s wrong, but she doesn’t believe me.

          *sigh*

          • Hi Panacea–

            People working part-time Must buy insurance — or pay the penalty. But that doesn’t mean that UNC or the State Teacher’s plan has to cover them.
            Part-timers are supposed to buy their own insurance in the Exchange where they will be eligible for generous subsidies. (There
            incomes are probably low enough that they will get v. good subsidies–plus free preventive care.)

  2. Maggie –

    Just because a low wage worker works for an employer that offers decent health insurance doesn’t mean that he signs up for it. Many of these workers perceive rightly or wrongly that they can’t afford their share of the premium or, more likely, don’t see it as a good enough value to warrant signing up based on their expectation of not needing much healthcare because they are relatively healthy. If the employee needs family coverage, his or her cost is virtually certain to be prohibitive as a percentage of pay.

    Under the ACA, if the employee’s required contribution toward the cost of single coverage is less than 9.5% of income, it’s deemed to be affordable coverage and he/she won’t be eligible for subsidies to purchase a policy on an exchange.

    Young employees 26 years old or younger will be able to stay covered under their parents’ plan if there is one. With the penalty set at just 1% of income, I suspect that lots of young healthy people, especially men, will remain uninsured. At $25,000 of annual salary, the penalty is a mere $250. While I agree that having insurance gives one peace of mind knowing that coverage will be there in case of a catastrophic medical event or diagnosis, way too many people just don’t think in these terms. They would rather have more money in their pocket now to spend on other things and deal with the consequences of no health insurance later if disaster strikes.

  3. My first question is this:

    If an employee is offered coverage at work, and their premium share is less than 9.5% of income, but there is no spousal coverage…….

    then can the spouse go onto the exchange and get a subsidy?

    Allthough Maggie’s points are well taken, there are a couple of things that bother me about the postponement of the
    ‘mandate’ (a word which is really too strong, but let’s stay with it for now):

    a. The penalties tied to the ‘mandate’ were supposed to be a big part of paying for the exchanges. I guess we can catch up in future years, but I wonder.

    b. When you look at what happened since the ACA was passed, it seems like the low wage workers in large firms have been hurt over and over again…..

    - reduction in work hours
    - reduction in hiring to stay under 50 ee’s
    - required contributions going up

    Now, perhaps the exchanges are going to bring a lot of benefits, and I may looking at the law just too early.

    Also, the expansion of Medicaid would have been a pure help to many low wage workers. That is because Medicaid is funded by the income tax, and does not have be pushed onto reluctant and frankly devious employers.

    • Bob–

      First, we were not counting on employer penalties to fund the subsidies– See my post about how “the Affordable Care ACt Pays For Itself . . ”

      The susbidies are funded primarily by the money that drug-makers, device-makers, hospitals and others who will profit from having more paying customers have agreed to kick in. In addition, higher taxes on those earning over $200,000 will play a role.

      No one expected employer penalties to bring in a large amount of money because : 95% of EMPLOYERS WITH MORE THAN 50 EMPLOYEES Already insure them. In addtion , under the ACA their premiums will be about 18% lower (they will qualify for group rates). Third: penaltiies of $2,000 to $3,000 pre employee are stiff. Finally, in an envionment where most employers are offering good insurance, those who don’t will losing out when competing for top employees. (see the problems Wal-Mart is experiencing.)

      Finally– workers are NOT losing hours or jobs because of Obamcare. This is more misinformation that conservatives are spreading.
      Ask them to name 20 companies that are doing this– and to count the number of employees affected.

      A few chains have threatned to do this. By 2015, probably most will back down.

      Finally, see my reply to Barry

  4. Bob –

    The answer to your question is no. The ACA, as written, defines affordable coverage as an employee contribution of 9.5% of income or less for single coverage even if the employee needs family coverage. As far as I know, the spouse may be able to go to an exchange to buy a health insurance policy but will have to pay the full premium out-of-pocket. He or she will not qualify for a subsidy. This is widely recognized as something of a flaw in the law but Congress would have to pass separate legislation to fix it and that’s not likely to happen anytime soon.

    Regarding Medicaid, one important issue that you did not consider is fluctuating income. Some one who may work seasonally, sometimes part-time and sometimes full time may qualify for benefits one year but not the next. Income eligibility would need to be periodically re-verified.

    In Germany, while health insurance is largely financed through a payroll tax, people get their insurance through non-profit insurers called sickness funds. If you’re unemployed, your premium is paid for by the unemployment insurance fund and if you’re retired, it’s paid through the pension fund as I understand it. Both of those funds are financed by separate payroll taxes paid by workers and their employers. The downside is that the health insurance payroll tax is roundly 15% (employee plus employer share combined) of salary up to a ceiling of €45,000 or so or about $58,500 at current exchange rates.

    Children are covered through general tax revenue based on the theory, according to Princeton’s Uwe Reinhardt, that they are a national treasure. Higher income people can opt out of the public system and buy private insurance instead which is generally cheaper but they cannot get back into the public system later unless they can prove that they are destitute. About 5%-10% of the population does this.

    There is no equivalent of Medicare or Medicaid in Germany. I just don’t think Americans would tolerate the level of taxation needed to replicate the German approach especially given that prices per medical service, test and procedure are much higher in the U.S. than anywhere else in the world. If it were easy to replace our employer based system coupled with Medicare and Medicaid in a way that was broadly acceptable to the majority of the population, we would have figured out how to do it a long time ago. It can’t be fixed just by soaking the rich. That’s for sure.

    • Barry–
      Your reply to Bob contains some mmisinformtation.

      The law stipulates 9.5% of the individual employee’s income because we want a spouse to purchase insurance through his her insurer.
      (Now that we have an employer mandate, the vast majority of employers will be offering comprehensive insurance.)

      Employers are very tired of paying for insurance for spouses while the spouse’s employer takes a “free ride.” Even before implementation of the ACA many employers have begun to refuse to insure spouses.
      They are required to insure dependent childdren, not spouses.

      What if she is not unemployed or self-employed? She can go to the Exchnange where MOST LIKELY SHE WILL QUALIFY FOR A SUBSIDY.
      If her husband’s income is so low that insurance will cost more than 9.6% of their income, chances are their joint income will be low enough to qualify for a good subsidy.

      The ACA proivdes for fluctuating and seaonsal income.

      The Germans do believe that chlildren are a national treasure. (IF only we felt that way, fewer American kids would go to bed hungry–or live in poverty. We have a higher percentage of kids living in poverty than any other developed nation.)

      Only 5% to 10% of Germans opt out of hte public system and buy private insurance becuase, under private insurance, the medical care is no better. I once interviewed a prominent German oncologist who explained that this is why he uses a public system. The private system might guarantee more frills –but the medical care is the same. And even wealthy Germans are, by and large, too frugal to pay for frills

      You’re right– Americans would not tolerate the level of taxation that Germans, the French, the Danish the Swiss etc. accept. We have been willing to live in a nation where a great many of our fellow citizens go without the health care they need— but now, our values seem to be changing. This is one reasonwhy we re-elected Obama– we want universal care, even though Ameircans earning over $200,000 will have to pay higher taxes to ake it happen.

      Our rich (top 5%) are much wealthier than the top 5% in other developed countries and pay a much lower level fo total taxes. This has lead to income and wealth inequalities that have done great damage to our economy, and to our society. I have just finished reading an excellent long paper documenting what has happened since the late 70s, and hope to write about it soon.

      If we ask the rich to contribute their fair share (what you call “soaking the rich”) we will have enough money to improve safety nets–not just health care, but education, pensions, etc.

      The political winds are shifting: many Americans are disgusted with the Republican party, and demographic changes also favor progressives.
      I expect that tax rates for the top 5%- perhaps top 7% will be rising over the next 3-5 years.

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  7. Do I have this right?

    One spouse earns $50,000 and must pay $4,000 a year for their share of employer insurance.

    The other spouse makes $20,000 and gets no insurance at all from their employer.

    So the other spouse can get a subsidy on the exchange based on $70,000 of family income?

    That would seem fair to me.

    One small point about Northern European health systems.
    Their financing is far better than ours in many ways, and Uwe Reinhardt is a hero of mine.

    However, German children are a treasure if they are white and Christian.

    In Germany, Sweden, and France, there is much hostility toward Middle Eastern immigrants and their large families.

    Japan also treats its children well, and they are a very race-conscious nation.

    For that matter, children are treated well on the whole in New Hampshire, Vermont, North Dakota and Minnesota.
    There is a pattern here.

    If Europe had the level of immigration in 1946 that it has today, some of their excellent social welfare systems would not have passed.

    Does not make them devils, but this is just a fact.

  8. Bob –

    In your example, if the couple has no children, the wife would not qualify for a subsidy since 400% of the federal poverty level for a two person household in $62,040. If they have at least one child, she would qualify for a subsidy. Presumably, the 9.5% required income contribution threshold would consist of the husband’s contribution toward his coverage and that of his children plus enough from the wife to bring the family total to 9.5% of gross income. If the definition of gross income is the same as what the Social Security Administration uses to calculate the IRMAA surcharge on the Part B premium to be paid by high income beneficiaries, it’s a very broad definition that doesn’t allow for deductions or adjustments.

    You make a good point about the attitude toward immigrants in much of Western Europe and Japan.

    In America, I wonder how many poor people are poor because girls got pregnant as teenagers and dropped out of high school and fathers made no effort to contribute to the support of the children they helped bring into the world or even be involved in their lives. Personal responsibility has to count for something here.

  9. Barry & Bob–

    First of all, in Bob’s example, the wife almost certainly would qualify for a subsidy: If her husband’s income is so low that insurance cost more than 9,5% of insurance, their
    joint income almost certainly would make her elibigle for
    a government subsidy.

    As Barry notes, a couple earning up to $62,000 is eligible for a subsidy.

    But it’s important to realize that their income level is measured not by gross indcome, but by “adjusted modified gross income– after any contributions to a SEP or IRa, and after deductions for health insurance that any self[-employed person can take.,
    In other words, the couple might earn $69,000 or $71,000 and still qualfiy for a subsidy.

  10. Bob-

    Your last comment ends: “This is just a fact.”

    No it is not a fact.

    You write: “German children are a treasure if they are white and Christian.”

    My American step-son is married to a very dark-skinned woman from Turkey . (She is not Christian.) She has lived in Germany for most of her life, and they lived in Germany together for 7 or 8 years.
    Throughout her life, she has gotten an excellent education in Germany and great healthcare.
    When she had their child, the care that she received in a German hopsital was better than a white middle-class woman could expect in the U.S.
    After that, she received 6 months of paid maternity leave.
    The fact that neither she, nor her husand were German citizens made no difference.
    The rest of your comment also is filled with misinformation ,

    ,

  11. Barry–

    You write:
    “In America,I wonder how many poor people are poor because girls got pregnant as teenagers and dropped out of high school and fathers made no effort to contribute to the support of the children they helped bring into the world or even be involved in their lives. Personal responsibility has to count for something here”

    Barry–if you “wonder”-why don’t you Google it.

    (See my reply to Bob. I’m sure that you, too, know how to Google.)
    You reference to “unmarried pregnant teenagers “is
    typical of so much misinformation spread by libertarians.

    They tend to suggest that low-income , non-white teenagers are responsible for poverty.

    Have you looked into the numbers, broken out by single-mother familes, sinlge males, etc,
    Have you looked into the nubmers broken out by race?
    Have you looked into how many median-income white unmarried girls become pregnant? (By median income , I mean exactly that.)
    Finally, Barry , if you are truly intrested in what causes poverty . . .
    It is not about teen-agers becoming pregnant.
    It is all about class and race.
    Let me suggest that you read http ://scalar.usc.edu/works/growing-apart-a-political-history-of-american-inequality/index
    It is an extremely intelligent paper– I hope to write about it soon,

  12. Maggie –

    There were 4.1 million births in the U.S. in 2011. Of children born to Asian-American women, 11.3% were out-of-wedlock. The comparable number for births to non-Hispanic whites was 26%; for Hispanic whites, it was 43%; and for African Americans, it was 67.8%. The percentage of total births that were out-of-wedlock was 36%, up five percentage points just since 2005. Since 1980, the statistics are up dramatically not just in the U.S. but in most other developed countries as well. I didn’t suggest that this is the only reason why some people are poor but I did suggest that personal behavior is often a contributing factor.

    I remember that the late NY senator, Daniel Patrick Moynihan, wrote extensively back in the 1960’s about the disintegration of the black family in America and took a lot of heat at the time from his fellow liberals for doing so. He also later noted that, at least in his opinion, the defining issue in America is not race but class.

    Regarding the generosity of the social safety net, middle class Americans won’t tolerate paying half of their income in combined federal, state and local taxes to support a generous safety net while Europeans generally accept it. Yes, there is probably room to raise taxes somewhat on high income people but probably not as much as you think or hope and even if we’re successful in doing so, the new money raised is more likely to be used to shrink the federal deficit rather than expand the social safety net.

    • Barry–

      We are now living in the 21st century.

      Some women choose to have a child without marrying–oftenm they are in their 30s In many cases, this is preferable to
      trying to raise a child with a man who a) is not well-suited to being a father (too immature, too
      selfish) or b) who she does not love or respect.

      Having a child “out of wedlock” no longer carries the stigma that it once did.

      Frequently Lesbian couples decide to have a child. When one of them becomes pregant she is having a
      child “out of wedlock.” Few people assume that this means the child will wind up trapped in poverty.

      Of course when 16-year-olds have children, the mother usually lacks the maturity to raise the
      child. But in many cases the grandmother does a good job.

      For a long time, conservatives tried to blame “out of wedlock births” for everything from poverty to crime to
      our poor public school system. Today, we have learned to stop “blaming the victim.” (Btw that phrase was coined in
      reponse to Moynihan’s work.)

      Daniel P. Moynihan is widely considered to be a racist– and a misogynist.
      He blamed the “sexual irresonsibility of poverty” for single-motherhood.

      In fact, so many African American mothers were not married because men in their culture had such a hard time getting jobs.
      Employers (and many others) are afraid of black men. They distrust them. They assume they will steal. They are physically afraid of them.

      Thus unemployement among young African American men is always higher than unemployment among Latinos etc. (White men are not nearly as afraid of Latino/Hispanic men.)

      A man without a job is depressed. He is angry. He may well drink to excess or take drugs. This all can lead to wife-beating and child-beating.

      A mother and her children are in most cases better off without a depressed and angry spouse and father.

      I do not blame the man for his reponse to a society that refuses to give him a job. But a woman is wise if she takes herself and her children out of that situation.

      Moynihan’s misogyny can be seen in his assumption that a woman cannot raise a family alone.

      W.E.B. Dubois is just one of a great many very successful African-Americans who were
      raised by a single mother.

      For generations, white as well as black women have raised children alone. I can’t tell you how many people I know who credit their success in life to a single mother. Frequently, the matriarch of a black family is a grandmother who becomes a symbol of strenght for the entire family.

      I also cannot count how many people I have known who remained angry and bitter, throughout life, about an abusive, angry father who crippled them, emotionally and intellectually, by belittling them.

      Since Moynihan’s time, a great deal of reserach has been done showing that children of single mothers are just as likely to succeed as children who have two parents. This is, no doubt, in part because so many two-parent families are unhappy families– the mother and father
      do not get along, and the children suffer as a result.

  13. http://www.americanprogress.org/kf/hertz_mobility_analysis.pdf‎
    Understanding Mobility in America by Tom Hertz is a good one also. Briefly key findings:

    “Ø Children from low-income families have only a 1 percent chance of reaching the top 5 percent of the income distribution, versus children of the rich who have about a 22 percent chance.
    Ø Children born to the middle quintile of parental family income ($42,000 to $54,300) had about the same chance of ending up in a lower quintile than their parents (39.5
    percent) as they did of moving to a higher quintile (36.5 percent). Their chances of attaining the top five percentiles of the income distribution were just 1.8 percent.
    Ø Education, race, health and state of residence are four key channels by which economic status is transmitted from parent to child.
    Ø African American children who are born in the bottom quartile are nearly twice as likely to remain there as adults than are white children whose parents had identical
    incomes, and are four times less likely to attain the top quartile.
    Ø The difference in mobility for blacks and whites persists even after controlling for a host of parental background factors, children’s education and health, as well as
    whether the household was female-headed or receiving public assistance.
    Ø After controlling for a host of parental background variables, upward mobility varied by region of origin, and is highest (in percentage terms) for those who grew up in the South Atlantic and East South Central regions, and lowest for those raised in the West
    South Central and Mountain regions.
    Ø By international standards, the United States has an unusually low level of intergenerational mobility: our parents’ income is highly predictive of our incomes
    as adults. Intergenerational mobility in the United States is lower than in France, Germany, Sweden, Canada, Finland, Norway and Denmark. Among high-income
    countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States.”

    You would have a greater probability of being poor if you are born into poverty and a higher probability of slipping backwards into poverty even if you did rachet up one or two levels. Upward mobility is rigged in favor of those who are already born (to use an old GWB descriptor) on third base. There are factors improving mobility such as environment, health, education, etc.; but, the key one is money.

    • Run–75411

      Thanks for the citation.
      Your last sentence says it all: ‘There are factors improving mobility such as environment, health, education, etc.; but, the key one is money.

  14. Maggie, you write very eloquently about the black family and the awful effects of discrimination. Thank you.

    But I am still correct about the Northern European countries.
    The solidarity that characterizes their health benefits is directly connected to their relative homogeneity both religiously and racially.

    Welfare states are more rare and more precarious in racially diverse nations. This is not an excuse for America not to show more solidarity……but it is an explanation of our conduct.

    See Michael Lind’s article “Uninsured LIke Me.”

    • Bob–

      A very good book titled “Mulitculturalism and the Welfate State” suggests that you are mistaken about homogeneity being necessarhy for a welafare state that provides safety nets for all of its citizens.

      The argument you make is one that Americans often have made to justify our refusal to share with each other (or care for each other).
      As the author points out, it is true that racial diversity has had a negative impact on welfare policy. Indeed in those states where we have the highest numbers of Blacks and Hispanice, support for welfare programs is much lower.

      But this is not the case in Europe– even though non-white immigration has risen. (There are substantial minorities in the UK, Netherlands, Germany, Denmark and Canada. (My daughter lived in Canada for 4 years while going to college and was struck by the lack of racism there. She had been there about a week when she called me to say: “Mom, you know if you lived up here, you wouldn’t even be considered that far left.” Even here, on the Upper West Side of New York, a number of her friends’ mothers disapparoved because I let her
      hang out with African-American and Latino boys as well as white kids. )

      Going back to the book: the authors write that despite the rise in non-white immigration, in the UK, there has been “no backlash against ethnic diversity” To the contrary, “tolerance has increased in over time.” While there has been some weakening of support for re-distributing wealth, “this has to do with changing economic conditionis, not increased diversitiy of the population.” Reserach “casts doubt” on the notion that multiculuralism undermines “the welfare state.”

      Surveys show that in Western Europe 73% of the population agrees with the statment that it is “good if society is made up of minorities.”

      In many European countries (such as France) Europeans like to see immigrants take on the customs of their new home. But they are more than willing to provide health care, education, etc.

      Another book points out that Western Europe lacks our history of “deep, broad racial subordination.”

      It is worth nothing that the practice of buying and selling black slaves continued in the U.S. for a great many years after it was outlawed in the U.K.

      Then there is this
      In the late 19th and early 20th centuries, the U.S. never built up a labor movement, let alone a labor or socialist party, with the power of those in most European states because racial animus prevented the black and white lower classes from organizing together. It was hardly the only factor, but it was a critical one. To this day, race is the best predictor of support for welfare, and during last year’s debate, racial animus was correlated with opposition to health-care reform. (Matthew Dyland)

      Matthew Yglesias adds:
      ” It’s not so much that racial animus prevented the black and white lower classes from organizing together as it was that labor leaders made a conscious decision to exclude black workers in exchange for more and greater influence.
      For example, in order to bolster the AFL’s political power, Samuel Gompers — it’s founder and head — expelled and actively discriminated against African-American workers while moving to accommodate their mostly-skilled white counterparts (the same force motivated the AFL’s support for the 1882 Chinese Exclusion Act). This also holds true for the Populist movement (and subsequent Populist Party), which began as an interracial coalition of farmers and unskilled workers, but eventually segregated as its leaders tried to win political power by building support among Southern whites. And this is to say nothing of the fact that major stakeholders in opposition to the labor movement used racial animus to sow division among labor leaders.”

      Finally, I would add that in the U.S. we are divided not only by race but by class.

      Since the 1980s contempt for the poor has become commonplace. I can remember riding the subway home from Wall STreet in the 1980s, surrounded by young, white WAll Street brokers– and the occasional “bad lady” (poor homeless women carrying their belongings in a shopping bag.) These young white men would make fun of them–openly– to their faces.

      I have ridden subways in Europe where their were gypsies on the cars– no one made fun of them. I have never seen such contempt for the poor any other place except Brazil.

      So no the “diversity” of our culture does not explain our lack of generosity.

      I don’t know how to explain it– perhaps it goes back to the rigidity of our Puritan heritage. (Remember, the Puritans were quick to identify some women as witches. From the beginning, it was an exclusionary society. And of course American Indians were seen as devils.
      We believed that we had every right to drive them off their land.

      It is ironic– many of the people who originally settled this country had been discriminated against at home– including the Puritans. But when they came here, they become very much like those who had persecuted and tortured them.

  15. An unfinished paper (with citations) which I believe supports much of what you are trying to say.

    While many US citizens still believe in the American Dream, Tom Hertz noted (“Understanding Mobility in America,” 2006 Table 1); of all those born into the lowest quartile of income, 46% had a more likely outcome of remaining there as adults. If black and born into the lowest quartile, the likelihood of remaining there was 63%. James Gilligan takes it a step further in his study (“Reflections on A National Epidemic – Violence” Gilligan); quoting H.A. Bulhan’s reference to structural violence. “For every 1% increase in unemployment in the United States, there was an increased mortality of 37,000 deaths per year (natural and violent) including ~2,000 more suicides and homicides than might otherwise occur.” Or explained in simpler terms, for every 1% increase in Unemployment, we can expect to see increases in the mortality rate by 2%, homicides and imprisonments by 6%, and infant mortality by 5%. Since WWII, the unemployment rate for blacks has been twice as high as that of whites. (Frantz Fanon and the Psychology of Oppression; H.A Bulhan; Mental Illness and the Economy, M.H Brenner). Hertz points to a decrease in income mobility and Bulhan points to higher crime, violence, and death rates due to unemployment. Both Hertz and Bulhan point out the impact for those of the lowest income brackets and black minorities even more so. The resultant increases in violence, homicides and imprisonments can be attributed more so to poverty than related imprisonments as a result of being tough on crime. Hypertension amongst those living in dangerous urbanized environments is also higher when compared to those of high income environments. Given the last 8 years of poor economy; is it any wonder that death rates are higher due to violence or natural causes, more people are going to prison, more of those going to prison are black minorities, and more are going and staying longer in prison due to stringent sentencing.

    “The poor man’s conscience is clear . . . he does not feel guilty and has no reason to . . . yet, he is ashamed. Mankind takes no notice of him. He rambles unheeded. In the midst of a crowd; at a church; in the market . . . he is in as much obscurity as he would be in a garret or a cellar. He is not disapproved, censured, or reproached; he is not seen . . . To be wholly overlooked, and to know it, are intolerable.” John Adams

  16. Run–

    Thank you quoting John Adams.

    Btw, do you see the wonderful mutli-part series “John Adams” starring Paul Giamatti with Laura Linley as
    Abigail. Recently, we rented it: I haven’t seen anything that good in a long time.

    Let me just repeat what Adams said–hoping that everyone looking at these comments will see it:
    “The poor man’s conscience is clear . . . he does not feel guilty and has no reason to . . . yet, he is ashamed. Mankind takes no notice of him. He rambles unheeded. In the midst of a crowd; at a church; in the market . . . he is in as much obscurity as he would be in a garret or a cellar. He is not disapproved, censured, or reproached; he is not seen . . . To be wholly overlooked, and to know it, are intolerable.” John Adams –

    Yes–to be wholly overlooked– not to be seen– is intolerable. This is what leads to the rage, and the violence, the high blood pressure, the self-medication. And we wonder why the poor die sooner than the rest of us.

  17. Bob–

    I did look at Michael Lind’s Uninsured Like Me.

    He assumes that homogenity is necessary for a generous social welfare state and uses “Nordic nations everyone is related to everyone else” as an example.

    IN fact, in Sweden 11% of the population was born outside of Sweden.

    There are also a great many immigrants in Denmark.

    Lind needs to get out more (or travel more).

    Nordic countries have always been extremely tolerant of “others”.

    I recall, back in the Sixties, how scandalized Americans were that some Swedish women were choosing to marry black men. . .

  18. Maggie:

    If you feel up to an informayive read, pickup Dr. John Gilligan’s “Reflections on A National Epidemic – Violence.” Dr. Gilligan is a prison Psychiatrist who worked in a maximum security (level 5 or 6) prison. There is much there which relates to John Adams reflections.

  19. Maggie, thank you for the excellent quotes above. Where did you find that incisive comment by a Matthew Dyland. I agree with him that a labor movement would make all the difference in the USA.

    I have never been to Europe so I cannot be an expert.
    However, a Europe that actively tolerates minorities is radically different from the Europe that existed before 1950.
    The Nazis were of course monstrous, but the sad truth is that they had plenty of help in their actions in most of the nations that they conquered. Most of my extended family came from Latvia and were wiped out.

    So I guess that accounts for my skepticism about European tolerance. Did all the nations just get wealthier, or are they deeply ashamed of their former intolerance?

    Your comments are valuable. Just something does not add up to me.

    • Bob–

      Given your family history in Latvia, I can understand why you feel the way you do.
      But when it comes to tolerance for diversity, during WW II Eastern Europe (and Germany) were very different from Western Europe.
      The the King of Denmark who spoke out publicly about protecting “Our Jews.” Denmark refused to deport them.And the Danish did their very best to protect them.

      A great many French families risked their lives hiding Jews (often Jewish children, and often on farms.) Some years ago, there was a wonderful documentary interviewing elderly people who had done this. Their reason was simple: it was just the right thing to do. See http://www.chambon.org/weapons_en.htm
      Also see http://www.amazon.com/Secret-Lives-Hidden-Children-Rescuers/dp/B000244FPU (Note some of these children were hidden in Poland, so it wasn’t only Western Europeans who acted on what the film calls “common decency.”)

      In the Netherlands “the arrests of several hundred young Jews (sent to the Buchenwald and Mauthausen concentration camps) led to a general strike by Dutch workers on February 25, 1941 . . . Ultimately 107,000 Dutch Jews were deported . . but 25,000-30,000 Jews went into hiding, assisted by the Dutch underground. Two-thirds of Dutch Jews in hiding managed to survive.”
      http://www.ushmm.org/wlc/en/article.php?ModuleId=10005436

      Obviously this didn’t happen in most Eastern European countries– or in Russia.

      Spain also became a place where Jews found refuge. If they got to Spain, they had a fair chance of
      getting to the U.S.

      The Italian govt collaborated with the Jews, but Italy also had its underground, and people who tried to help Jews get out of Italy.

      Sadly, in the U.S. we refused to take in an entire shipload of Jews looking for safety. And we failed to save a great many Jewish children who could have been saved. . . (The U.S. was antisemtic–this is one reason why FDR had such a hard time going into WW II. Many influential and wealthy Americans backed the Nazis. A

      That said, a great many American men died fighting the Nazis.

      And, to be fair, most people in the U.S. had no idea what was going on in the Concentration Camps. (Europeans were much more likely to know. Many had relatives living close to the Camps.
      Meanwhile, our press did not want to know what was happenign and did not let us know )

      When our soldiers finally arrived at the Camps, and saw for themselves, they were appalled.

  20. The intense Republican attack on Obama care obscures the facts. Obama care is already a success in some ways. There are provisions of the act that all Americans, even those that are opposed to it, now enjoy and will never want to give up such as health insurance for children up to age 26. As more and more Americans see more of the benefits of healthcare reform it will be increasingly difficult to obscure the facts with the fog of the special interest attacks on it.

    • Chloe–

      Thank you so much. It’s a relief to hear from someone who realizes that the glass is 2/3 full!

      No, the law isn’t perfect, but there is so much negativity out there, and so few folks willing to acknowledgethat many people already have been helped by the law– including the young people you write about as well as children suffering from preexisting conditions.

      I, too, am very hopeful that next year, as most of the major provisions kick in (particularly the subsidies and the far better insurance that individuals will be able to get in the Exchanges) the fog of misinformation will begin to lift.

      This, I think, is one reason why Obamacare’s opponents have become so hysterical: they realize that they have only a few months left before the reality of Obamacare will make it much harder for them to persuade Americans that Obamacare will hurt them.

  21. This is a terrible idea. The individual mandate remains in place, which means the worker has one less option to buy insurance when their workplace will not offer it – and therefore may end up paying more than they otherwise would have. Also, it takes crucial dollars that would go towards the funding of the health care bill when the employers choose to pay the fine.

    • Jack–

      This is not nearly as bad as you fear.

      If an employer decides not to offer comprehensive insurance in 2014 (because the mandate has been delayed) his employees
      will be able to buy their own insurance in the individual Exchanges.

      There, insurance will be much less expensive than it is today for people traying to buy their own insurane in the
      individual market.

      This is beacuase in the Exchanges, individuals will become part of a “large group” and pay far less than individuals and samll grupos now pay (Today, insurance companies now charge small groups 18% more than they charge large compani–and they charge individuals even more.

  22. I understand why as someone with a decent job that already offers insurance, or say a politician might look at these numbers in the article and say that not very many people will be affected. I understand we on the bottom are insignificant, but I have some very real numbers for you. —Me and my husband both go to school full time and work full time in very famous nation wide chain restaurants. or should I say worked full time- as of a week ago, no one, that’s not one single employee outside of management is allowed to work more than 29 hours each week and no they aren’t hiring anyone else, we were told to work harder because if customer sales drop, we work for tips so our pay drops as well as company profits. My company has 300+ stores and my restaurant has 234 employees not in management, the average monthly income for my restaurant is 1200$. That is 70,200 people taking a 25% pay cut or 300$, and no matter how affordable the care is or the stipend we get offered to buy health care I doubt it will replace the 252,720,000 we as employees will be losing annually in income. So when you say hardly anyone will be effected and you doubt restaurants will take this approach, know they already are. We are already paying the price for Obamacare and so far it seems pretty expensive to me.

    • Amanda–

      First, you’re not insignificant.

      Secondly, if you’re cut back from 35 hours to 29, working harder won’t take care of the customers during the six hours you are not there.
      They will have to hire more people to cover the floor–or face some very angry customers.

      Workers at your chain need to get together and threaten a walk-out.
      Also go to local newspapers and warn customers that service may be going downhill.

      I realize that takes courage, but they can’t fire all of you. Training people is expensive.

      The problem is not Obamacare; the problem is that you work for a company that believes that the best way to manage workers it to bully them. No doubt there are other restaurant chains (and inexpensive restaurants) in your area. Try applying for jobs.

      Finally, under Obamcare you will be able to get a pretty inexpensive Bronze plan in the Exchange–plus a subsidy. After the subsidy, some people will find the Broze plan premiums is $0. Others will find they must pay $50 a year, $75 a year. Meanwhile, the Bronze plan will
      provide free preventive care (including free contraception.) I realize this doesn’t make up for lost hours but you should realize that
      walking around without health insurance you and your husband put yourselves at great risk. If you’re hit by a car, a hospital doens’t hace to give you the treatment you need–by law it only has to “stabilize you.” Also, what if you become pregnant? Contraception is not 100%
      effctive.
      Also, if you go to school full time doesn’t the school offer insurance? (Even if it does, you may well be better off buying insurance in the Exchange where you will be eligible for a subsidy.

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