EC321-Topic #2 Health Care and Labor

It is widely acknowledged today that health care is a very important issue to both democrat and republican voters. With over 45 million uninsured Americans, and rapidly rising health care costs, this issue will be one of the divisive and deciding factors in the coming years. I’ve put links below to the six current front runners in the presidential race (alphabetically). I would like you to dissect their health care plans as they pertain to the consequences these plans will have on the labor market. Please take account of both suppliers (workers) and consumers (firms). I would like you to analyze one plan. If someone else has chosen your candidate, you must choose another candidate. If you would rather choose a non-front runner, you are free to do so, but please stick to ‘declared’ candidates. If you are not required to post, please choose a candidate outside of the ones listed below, or relate your knowledge of a state or foreign government to the issue of health care. (Just send me an email regarding your choice so I can approve it).

Hillary Clinton
John Edwards
Rudy Giuliani
Barack Obama
Mitt Romney
Fred Thompson

Questions you might try to answer:
How will this candidate’s plan affect the wages that employers pay to their employees?
How will this candidate’s plan affect the wages that employees receive?
What will happen in the overall tax code? Meaning, if a candidate’s plan is approved, how will income taxes change? If income taxes change, how will work incentives change?
If a candidate’s plan involves expanding a current plan, what impact will that expansion have on the status quo in the labor market?

Undoubtedly, each plan will say that more people will be covered in a better/more cost efficient way. Do not make a statement saying that more people will be covered more efficiently. Also, try to word your statement so that I do not know whether or not you are for or against that candidate. I would like your statements to be as subjective as possible, or in jargon terms, positive and not normative in nature. Also, remember, I want you to keep your descriptions short, basic, and related to classroom content.

NOTE: Read other students comments before posting, and please leave your name with your posting.

AN

4 thoughts on “EC321-Topic #2 Health Care and Labor”

  1. I imagine that each candidate’s webpage cites the same statistic: about 45 million Americans do not have health insurance, which includes about 9 million children. The following are some excerpts of Barack Obama’s heath care plan as per his webpage. 1. Universal health care coverage: subsidies available for those who cannot afford the premiums.2. Requirement for insurance companies to insure all applicants: without discrimination of pre-existing conditions. Furthermore, the companies are not allowed to charge different premiums due to pre-existing conditions.3. Making it easier to import generic drugs from other developed countries.4. Requiring business “to make a meaningful contribution” to their employee’s coverageObama also talks a lot about increasing technology and organization of hospitals; however, I feel as though that is the same jargon used by each candidate. In terms of the labor market effects, the underlying effect of each policy is the same. If business are required to chip in more with their employee’s health care insurance, that money will come out of the pocket of the employee by a reduction his/her in end-of-year bonus or a slower growth rate of his/her salary (as we discussed in class). Providing cheaper universal heath care by the government, and subsides for lower-income families, would require an increase in income taxes, again reducing each worker’s net wage.In effect, any health care plan has relatively the same effects on the labor market. Our questions then become normative: is the cost to the worker worth the outcome? Should our country provide universal heath care as Europe does? Is a lower net wage worth the end result? I honestly don’t know.

  2. The big issue in the coming presidential elections is undoubtedly health care reform. The Left is arguing that our costs of medical coverage and treatment are too expensive, discriminatory, and leave roughly 15% of Americans uninsured.Hillary Clinton’s highly publicized America’s Health Choices Plan universal coverage while lowering costs. By providing refundable tax credits to working families and placing more of the financial burden on large employers, Clinton claims that Americans will never be denied coverage or forced to pay over-priced premiums. What does this mean for the future of labor in the United States? By forcing the larger employers to guarantee coverage for their employees, they will undoubtedly cut wages to cover these costs.At first, this will result in decreased labor participation – yet, by offering tax-credit to working families, this neutralizes the disincentive to work for lower wages. Additionally, Clinton will offer tax relief to small-sized employers to aid in covering mandatory health care costs. What we will see is a labor shift from larger sized (probably corporate) employers to smaller companies. The will increase the reservation wage, and will force those large employers to rethink a competitive wage structure – possibly raising wages equal to their smaller-employer counterparts and finding the money needed to finance healthcare from other means (such as decreased executive compensation).

  3. John Edward’s proposed health care plan will make insurance better and more affordable so that one day every person in America will be covered. He proposes to accomplish this by creating tax credits and expanding current insurance programs both to bring health care costs down. He will then require employers to provide either partial or full coverage for their employees, and ultimately he will require all Americans to have health insurance.The plan is for employers to pay for health insurance, but these costs will be passed down to employees in the form of lower pay. If Edwards’ plan is successful it will result in lower wages across the board as every employer has to pay for insurance, but the decrease in wages should be outweighed by the increased quality of the health care plans. In the end, Edwards’ plan assumes that worker’s will understand that the value of quality health care outweighs the value of the lost wages.My question about Edwards’ plan is what about people who are unemployed or not in the labor force? Who pays for their insurance?

  4. Fred Thompson seems to have a different approach to health care than many of the other leading candidates. Instead of forcing employers to provide health care for their employees or setting up a national, federally run health care system for all Americans, Thompson seems to prefer reform within the current system. Thompson believes that a larger variety of health care plans should be made available to Americans so they can chose ones that fit the needs and the budgets of their families. He also wants to streamline current government programs to make them more efficient at helping needy families, and he wants to emphasize preventative health care by encouraging Americans to live healthier life styles. Thompson claims his plans wont increase taxes and he doesn’t say anything about employers paying for health care. So it seems that these plans won’t affect the labor market by cutting wages or increasing taxes for laborers, but it also seems doubtful that Thompson’s ideas would really improve the nation’s health care system.

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