Excerpts from Side Effects: The Economic Consequences of the Health Reform
by Casey B. Mulligan
(c) copyright 2014 by JMJ Economics

From Chapter 2

There is a big economic difference between a tax -- hidden or otherwise -- and a voluntary contribution for health insurance, for the same reason there is a big difference between socialism and capitalism. A worker who voluntarily allocates part of his or her paycheck for health insurance, or who voluntarily accepts and retains a job where health coverage is automatically part of his compensation -- gets what he pays for. If he declines to make premium payments, he loses his coverage. If he chooses a plan (or job) with low premiums rather than high, he gets low health benefits rather than high. Even though countries with national health insurance may finance their program with payroll taxes, the citizens who pay more payroll tax do not get better benefits than citizens who pay less. In effect, the tax approach has every person working for other people's benefits rather than his own. Changing from a voluntary contribution approach to a tax approach has consequences for the labor market because it reduces the rewards to employment and earning income. This is not to say one approach is necessarily better than the other, just that they differ significantly and the differences have to be examined in order to understand the economic consequences of the health reform.

From the concluding chapter

...this book brings the ACA’s hidden taxes out into the open and quantifies their importance....

The book was also written to show that economics did not, and does not, have to be ignored or superficially considered at the policymaking stage. ...The fundamental economic ideas, measurements, and conclusions of the analysis can be made accessible to audiences far beyond those professionally trained to carry it out.

Political pragmatists may claim that it is sometimes necessary to ignore economic consequences to support a worthy effort. Even without its pessimistic assessment of the ability of voters to receive information, this argument has been contradicted many times in history when unintended consequences overwhelmed promised benefits. Time will tell whether the health reform is remembered for its intentions or its economic surprises.

Chapter 1

from Chapter 7

All of the Tables and Charts

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