Obamacare: An entitlement and jobs/tax bill all wrapped up into one...

Most U.S. workers can only purchase healthcare insurance at favorable group rates through an employer.  That creates a "need" for workers to remain employed.  In addition, the federal government allows significant tax advantages for employer-based coverage. This creates a "need" for employers to provide healthcare insurance.

One outcome caused by this policy is that many workers who would retire before they become eligible for healthcare benefits through Medicare at age 65, don't retire.  As a result, employers cannot hire new workers until jobs open up when current workers retire.

However, some employers extend health insurance coverage to pre-65 retirees, facilitating earlier retirement for those who want it.

According to a study published by the National Bureau of Economic Research (NBER), 28% of large employers (200+ employees) in 2010 that offered employee healthcare benefits also extended them to retirees.  An additional 3% of small employers (< 200 employees) offered similar benefits.

The 1985 Consolidated Omnibus Budget Reconciliation Act (COBRA) allows retiring workers to maintain their former employer's health plan up to 18 months, the age at which workers can retire without risking a gap in healthcare benefits is 63.5.  Without going into the thicket of details concerning how COBRA has played out for the past 25 years, subsidizing healthcare benefits encourages workers to retire early, as early as the 62-year-old mark and especially at the 63.5-year-old mark.

But, what about earlier marks, like 52, 55, 57, or 60 years old?

The NBER data would suggest that Obamacare---which is an attempt to provide "universal" healthcare benefits---not only will provide a "patch" to cover healthcare costs until the early retirees reach the 65-year-old mark (when Medicare kicks in) but will also encourage more early retirements from the nation's workforce.

The nation's Physician-in-Chief

What a wonderful scheme to cure chronic unemployment!  Clear out all of those 50+ workers from the workplace by incentivizing them to retire early by providing full healthcare benefits.

Then, too, who'd have ever thought that Obamacare would cure a weak economy?  With all of those early retirees consuming 24/7/365(366) rather than producing and consuming, demand for goods and service (and hence, GDP) will grow!

And better yet, when corporations hire all of those younger workers at lower wages, think of what that will mean to allof those young workers who will now have to pay higher taxes for all of those retirees who are receiving those benefits subsidized by the federal government!  It's like living in Norway, Denmark, Greece, Italy, or Spain prior to 2008!

If the nation's young people only knew what they were being set up for and were taught these lessons in the nation's public schools, The Motley Monk would be willing to bet that they'd be conservatives when they reach the 18-year-old marker and eligible to vote for the first time.


Let the discussion begin...




To read the National Bureau of Economic Research report, click on the following link:
http://papers.nber.org/papers/w17703