Margins of Obamacare Avoidance

Obamacare goes into full effect in less than 12 months. Any social scientist wondering how the law will affect the markets for health care or labor needs to know the degree to which the policy will be implemented and enforced.

Large groups of people don’t like Obamacare, so one cannot forecast reasonably based on a model that assumes 100 percent implementation and enforcement. Obamacare would by no means be the first federal law that millions of people disobeyed. But then what’s the alternative forecasting approach?

To begin working toward an answer, I offer a list of possible ways in which individuals, states, and businesses may undermine the spirit and/or letter of law. I ask readers of this blog to add to this list, in particular as regards to the employer taxes, individual taxes, employer subsidies, and individual subsidies.

People who put little value on health insurance and are able to obtain waivers or find other loopholes in the individual mandate will be ineligible for the subsidies and have less reason than compliant workers to change their behavior in response to the ACA’s subsidies.

Part of the population may not value the insurance options offered by the insurance exchanges, and therefore forgo participation in those plans and thereby forgo the ACA subsidies.

The individual mandate is to be enforced as part of the federal personal income tax return. Parts of the population may:

  • fail to file a return,
  • file a return that falsifies their health insurance participation,
  • or refuse to make payments pursuant to the individual mandate,
  • and the Internal Revenue Service may lack authority (or otherwise not devote resources) to enforce it.

States may fail to set up insurance exchanges, and perhaps thereby make their residents ineligible for premium support and cost sharing subsidies, even those residents who comply with the individual mandate.

I am not recommending that people do these things, but rather trying to understand what will actually happen.

About Casey B. Mulligan 76 Articles

Affiliation: University of Chicago

Casey B. Mulligan is a Professor in the Department of Economics. Mulligan first joined the University of Chicago in 1991 as a graduate student, and received his Ph.D. in Economics from the University of Chicago in 1993.

He has also served as a Visiting Professor teaching public economics at Harvard University, Clemson University, and Irving B. Harris Graduate School of Public Policy Studies at the University of Chicago.

Mulligan is author of the 1997 book Parental Priorities and Economic Inequality, which studies economic models of, and statistical evidence on, the intergenerational transmission of economic status. His recent research is concerned with capital and labor taxation, with particular emphasis on tax incidence and positive theories of public policy. His recent work includes Market Responses to the Panic of 2008 (a book-in-process with Chicago graduate student Luke Threinen) and published articles such as “Selection, Investment, and Women’s Relative Wages,” “Deadweight Costs and the Size of Government,” “Do Democracies have Different Public Policies than Nondemocracies?,” “The Extent of the Market and the Supply of Regulation,” “What do Aggregate Consumption Euler Equations Say about the Capital Income Tax Burden?,” and “Public Policies as Specification Errors.” Mulligan has reported on some of these results in the Chicago Tribune, the Chicago Sun-Times, the Wall Street Journal, and the New York Times.

He is affiliated with a number of professional organizations, including the National Bureau of Economic Research, the George J. Stigler Center for the Study of the Economy and the State, and the Population Research Center. He is also the recipient of numerous awards and fellowships, including those from the National Science Foundation, the Alfred P. Sloan Foundation, the Smith- Richardson Foundation, and the John M. Olin Foundation.

Visit: Supply and Demand (in that order)

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