24 March 2010


Fewer firms will provide health insurance benefits to employees--but employees won't get wage increases to match the loss of benefits because the employer will either be taxed or the employer will have no incentive to offer the difference in efficiency wages. And smaller firms will drop benefit plans as soon as they can. I've already heard from our accountant that that is what we have to do. See here, here and here.
And larger firms are already planning on trimming the benefits offered to employees.

All of these shifts will result in less coverage for people who were otherwise perfectly happy with what they had last week and more people being covered by plans subsidized by the federal government. And it will not be funded solely by taxes on people making more than $200k/year.

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