Obamacare, Capital, and Labor

There is plenty of throwing rhetoric surrounding Obamacare (ACA). Curiously absent is a discussion on the balance of power between capital and labor.

Why is that? The balance between capital and labor is a core economic concept. It’s difficult to think clearly about many macroeconomic and societal issues without it.

I think it’s because many Americans equate the very mention of this topic as a Marxist wedge. (That’s if they know who Marx was. Today’s populist cry would probably be “Class Warfare!”) This is bizarre since the ole “land, labor, and capital” framework is introduced in every Econ 101 class. Not so bizarre when you consider the state of education in the United States. So, as is often the case, our public discourse is hobbled by ignorance.

Anyway…

Can we just be clear that, at least on the first pass, the ACA favors labor over capital? Health insurance isn’t so much about providing healthcare, it’s about protecting against financial ruin (*). Since WWII, the workplace has been the epicenter of health insurance in the United States. Employment-based health insurance means that if you lose your job, you lose health insurance.

In the 1990s COBRA gave the recently unemployed some time to get another job. But it wasn’t until the ACA that pre-existing conditions were eliminated for people outside of the corporate-sponsored health insurance scheme (**). So now somebody who’s both a) sick and b) sick and tired of a job can quit without worrying about qualifying for health insurance. Their health conditions will not increase their premiums. If their income falls enough, their premiums will fall further.

It seems like the typical employee has gained bargaining power at the margin. Especially the typical older employee. This may seem like a strange topic given the current weak macro state of labor, but I think we’ll see the impact more clearly if and when the economy gets closer to potential.

I’ll write more later on a possible hidden rationale for the Republican’s losing battle of ACA FUD bombing and repeal mongering.

* However, the requirements of the ACA further conflate health insurance with healthcare.

** Note that the law has long required that corporate-sponsored health insurance plans be essentially “internally socialized”. For example, you’ll note that when you’ve gotten a new corporate job in the past you took no health exam and were not asked about pre-existing conditions.

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One Response to Obamacare, Capital, and Labor

  1. Pingback: Republicans and Obamacare FUD |

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