Tuesday, February 4, 2014

Part-Time Workers and the Affordable Care Act


The New York Times editorial board recently noted that Target (and many other retailers) are taking steps to eliminate health insurance for workers and move part-time employees to the health exchanges set up under the Affordable Care Act.

While the Times is right to worry about whether the employees are receiving anything in return from Target for the drop in coverage (greater take-home pay, for instance), the fact that businesses are moving away from employer-sponsored coverage and toward greater use of the exchanges is precisely what was conceived when the ACA was drafted.

Indeed, Target’s decision to move part-time employees to the Exchange signals how the ACA is already nudging (hat tip: Cass Sunstein and Richard Thaler) America away from an employer-based health insurance system that is both a product of historical accident and an outlier from the rest of the world.

This system—which emerged due to wage controls imposed during World War II—is inefficient and inflexible. It fails to take advantage the economies of scale enjoyed by Medicare and thwarts mobility by tying a family’s health coverage to a particular job.

In the end, while the unwinding of Byzantine systems invariably saddles some with increased costs, the ultimate goal—of an America where health care is a human right rather than a corporate privilege—is surely worth that cost. In the years to come, it is that transformational shift-- and not a poorly-rolled out website-- that will stand as the ACA’s greatest legacy.

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