The Great Train Wreck: Incentives Matter

Incentives matter.  Markets are a fact, not an option.  The history of the Soviet Union, and for that matter the entire "communist" world is a case study in how markets are unavoidable and economic incentives are among the most powerful forces in any society.  The socialist ideology was driven by the idea that this could be overcome.  As a result, the entire universe that adopted the ideology - from Cuba to China to Hungary - demonstrated the economic and social bankruptcy of the ideology.

Incentives - not force - are the foundation of our free economy.  Taxes and fees are used freely by governments to nudge behavior, because it is well known that if you pay for something, you get more of it.  If you make it expensive, you get less.  Markets work.

The PPACA is full of incentives intended to elicit certain behaviors.  The PPACA's encounter with reality has been rocky.  Low-wage employees have been the primary victims.

The PPACA compels employers to provide health insurance for "full time" employees. The definition of "full time" is more than 30 work hours per week.  The incentive is a tax penalty.

Unsurprisingly, employers on tight budgets (in other words, all of them) have figured out that by reducing employee hours, they can avoid that penalty, so they are cutting their employees hours.

In short, the employer mandate is a hefty per-employee tax on the 31st hour worked.  Tax it, and you get less of it.  Welcome to the part-time economy, where wage earners need two jobs.

Rather than leaving employers and employees alone to work out an acceptable wage and work hour arrangement, and leaving employees free to buy or not buy medical services as they wish, the government is "helping".  The employee gets less money.  The employer gets less work.  Everyone loses.

The idea is that the politicians who are "giving us" this health "coverage" will win, but as we are seeing, the best laid plans. . .