The Incidence of Health Insurance
By Arnold Kling
I recapitulate some basic economics in my latest essay.
American firms will not become more competitive by shedding health care costs, unless in the process they can reduce the net compensation paid to workers. Cutting health insurance benefits and raising take-home pay or payroll taxes by an equivalent amount is a wash.
My liberal friends are all telling me that our auto companies would be more competitive if we had national health insurance, as they do in Canada. The concept that most people seem to miss is the theory that says that the cost of employer-provided health insurance is most likely to be borne by workers, not by employers.