I have great respect and admiration for David Cutler. His work on the value of medical innovation and how different risk perceptions affect how people value health insurance (and price sensitivity) is pathbreaking.
But his recent "research" report -- "New Jobs Through Better Health Care" explaining how health care reforms pushed by the Obama administration will save billions and create nearly 3 million jobs (as a result) is nothing short of hack work. I am waiting for his next study: "How Obamacare Will Turn The NJ Nets Into A Playoff Contender"
http://www.americanprogress.org/issues/2010/01/new_jobs_health.html
I won't go through chapter and verse -- yet -- on what a shoddy cut and paste piece of propaganda Cutler lent his name to. And I will ignore the fact that there is no methodology section that allows someone to look at how Cutler arrived at his conclusion or explains how 1) premiums will actually decline by 12 percent by 2019 (without subsidies) and how, assuming that is the case, even with higher taxes on business, earnings and income, that decline alone will bring back the 26 percent of American workers who just leave the work force altogether. Let me just focus on one amazing statement and deconstruct:
"we demonstrate a less emphasized point about the health care reform legislation currently before Congress—if successful, its provisions can lower the costs of business and increase both the number of jobs by 250,000 to 400,000 annually over the next decade and increase wage growth. "
Really? An analysis of the premium and tax burden imposed by the provisions David says will save money reveals:
There is also "a payroll tax increase that will permanently sever the link between the Medicare Payroll tax and its contributions to Medicare. This payroll tax increase of .5% on earnings above $200,000 for singles and $250,000 for joint couples will contribute money to the general fund for health care instead of directly for Medicare payments."
That would affect nearly 80 percent of all small businesses and somehow that provision lowers business costs....
http://www.heritage.org/research/taxes/bg2203.cfm
What is David Cutler thinking? More to the point, was he thinking? Certainly there are many factors that influence job creation apart from health care costs, especially if someone is claiming the jobs created are replacing those eliminated for reasons having nothing to do with health care costs!! Cutler knows that from his own research and from a quick scan of the research on labor economics. One thing is certain, adding mandated coverage to the cost of being an American or running a business is a tax just as providing a subsidy or third party payment of health care services is a non-cash form of income (tax free) that substitutes for income or lower taxes. However the effect of each will differ. A one size fits all approach to providing health care does not work. And trying to prove that the one size fits all approachh solves every problem is intellectually dishonest. Americans know a con job when they see it. And the Center for American Progress study on how better healthcare will create jobs that were destroyed during the recession is exactly that.
But his recent "research" report -- "New Jobs Through Better Health Care" explaining how health care reforms pushed by the Obama administration will save billions and create nearly 3 million jobs (as a result) is nothing short of hack work. I am waiting for his next study: "How Obamacare Will Turn The NJ Nets Into A Playoff Contender"
http://www.americanprogress.org/issues/2010/01/new_jobs_health.html
I won't go through chapter and verse -- yet -- on what a shoddy cut and paste piece of propaganda Cutler lent his name to. And I will ignore the fact that there is no methodology section that allows someone to look at how Cutler arrived at his conclusion or explains how 1) premiums will actually decline by 12 percent by 2019 (without subsidies) and how, assuming that is the case, even with higher taxes on business, earnings and income, that decline alone will bring back the 26 percent of American workers who just leave the work force altogether. Let me just focus on one amazing statement and deconstruct:
"we demonstrate a less emphasized point about the health care reform legislation currently before Congress—if successful, its provisions can lower the costs of business and increase both the number of jobs by 250,000 to 400,000 annually over the next decade and increase wage growth. "
Really? An analysis of the premium and tax burden imposed by the provisions David says will save money reveals:
- An average family who receives health insurance through a small employer and earning between $20,000 and $200,000 would be paying, on average, a range of $82 to $892 more. In the large group market, an average family making between $30,000 and $200,000 would be paying, on average, a range of $116 to $724 more.
- An average head of household who receives health insurance through a small employer and earning between $20,000 and $200,000 would be paying, on average, a range of $383 to $1,587 more. In the large group market, an average head of household also making between $20,000 and $200,000 would be paying, on average, a range of $185 to $1,419 more.
There is also "a payroll tax increase that will permanently sever the link between the Medicare Payroll tax and its contributions to Medicare. This payroll tax increase of .5% on earnings above $200,000 for singles and $250,000 for joint couples will contribute money to the general fund for health care instead of directly for Medicare payments."
That would affect nearly 80 percent of all small businesses and somehow that provision lowers business costs....
http://www.heritage.org/research/taxes/bg2203.cfm
What is David Cutler thinking? More to the point, was he thinking? Certainly there are many factors that influence job creation apart from health care costs, especially if someone is claiming the jobs created are replacing those eliminated for reasons having nothing to do with health care costs!! Cutler knows that from his own research and from a quick scan of the research on labor economics. One thing is certain, adding mandated coverage to the cost of being an American or running a business is a tax just as providing a subsidy or third party payment of health care services is a non-cash form of income (tax free) that substitutes for income or lower taxes. However the effect of each will differ. A one size fits all approach to providing health care does not work. And trying to prove that the one size fits all approachh solves every problem is intellectually dishonest. Americans know a con job when they see it. And the Center for American Progress study on how better healthcare will create jobs that were destroyed during the recession is exactly that.
