Who is Really Indentured Under Obamacare?

Should we care if people decide to work less because they get more government benefits? Writing at Salon Brian Beutler says we should focus on the benefit to individuals who are no longer indentured at jobs they don’t want because of health care costs.

Beutler’s headline says conservatives have rediscovered their “love for indenture.” If you look up “indenture” the definition will be something like “A contract binding one party into the service of another for a specified term.” In this case, he’s talking about people being bound to jobs because of insurance costs.

The whole debate is based on a new CBO report released this week which showed that the equivalent of 2.5 million people would choose not to work thanks to Obamacare. This estimate is based on working hours so the actual number who choose not to have a job at all will be much lower and the number who choose to simply work fewer hours will make up the rest. In any case, Beutler asks us to imagine two people and then judge which one is deserving of “government intervention.”

Imagine someone who’s been employed consistently for 25 years. He
doesn’t earn big wages, but he’s frugal and would have enough money
saved for a modest retirement but for the fact that insurance on the
individual market will cost him $1,500 a month — or simply won’t be made
available at all.

Now imagine someone else who’s been employed
consistently for 10 years and thinks it’s time for a change. She wants
to join a new start-up, which is offering her a decent salary bump, but
won’t provide health insurance, or the insurance they will provide will
place her pediatrician out of network, and her child has a preexisting
condition.

Of course Beutler’s answer is that they both deserve a hand from the government. That means the guy who worked for 25 years and wants to retire at, say, 53 will be able to do so. Obamacare subsidies will cover the majority of his insurance costs until Medicare and Social Security kick in at age 65. That’s great news for him. He can focus on his stamp collection, or whatever, instead of schlepping to work every day.

The second person is an example of someone who wants to stay in the work force but move jobs. Since she’s getting a big salary bump it’s a safe bet she’s not going to be working fewer hours. So she’s not really one of the people CBO was discussing in its report. She’s not pulling back, she’s leaning in.

Let’s imagine a bit more about her. She’s 34 years old with a college degree. Been working 10 years as Beutler suggested. And let’s assume she’ll be making $43,000 a year at her new, higher paying gig. That means she’s not going to get any help in the form of a subsidy. She’ll pay around $2,700 a year in premiums. She won’t use nearly that amount in services which is good because money saved on her policy (and people just like her) is needed to subsidize Mr. Early Retirement’s decision to redirect his energy into philately.

Is this really a good thing? Even Beutler admits there is a danger lurking here. He writes “If Congress gave me $100,000 a year for nothing, I’d probably never hold down a job again.” But that insight is hard to square with the left’s response to the CBO report.

Obamacare isn’t killing jobs, the left argues, it’s only decreasing the hours people choose
to work. How can that be a bad thing? And of course it’s not a bad thing for the people working less (excluding, for simplicity, any moral argument about work). It’s all good for them. They get to knock off early or retire early. Few of them, if any, will complain.

The real question is this: Do we want a system where some millions of working age people choose to work less because other working age people are forced to subsidize them doing so? Is this fair to the people who pay the bills? Even the example Beutler offered suggests it’s not. Why should a 34 year old woman working her way up be asked to subsidize the early retirement of a 53 year old stranger?

And here’s where I think there is a broader question that goes beyond one CBO report or even beyond Obamacare to “government intervention” in general. The welfare system in many parts of the country is fairly generous. The CATO institute examined this issue last year and found that the “In 11 states, welfare pays more than the average pre-tax first year wage for a teacher.” The report adds “In 39 states it pays more than the starting wage for a secretary.”

Granted, $35,287 (the amount one can “earn” on welfare in California) isn’t $100,000 a year but not everyone has Beutler’s high expectations. For some people, $35k is enough to discourage them from taking a job where they would work a lot more for very little change in their standard of living. Why bother?

Generally speaking, the decision to work less at others people’s expense does not seem like something we ought to be defending, much less celebrating. And, getting back to Obamacare, it’s pretty silly to label the working age people who cut their hours “indentured” when you are asking other working age people to take home less money in order to cover their subsidies. Who is really being locked into a contract of service to someone else, Mr. Early Retirement or Ms. Young Worker?