Guess Who Pays the “Slacker Mandate”? Workers with No Kids!
The “slacker mandate” is the provision in Obamacare requiring employer-based health plans to offer benefits to adult dependents of their workers, up to age 26. I have discussed research showing that the mandate reduced work among adults, aged 19 to 26, and increased the time they spend socializing, sleeping, and exercising.
What about the financial costs of the mandate? Speak to an insurance agent or benefits consultant and they will tell you the cost are fully borne by working parents.
In the old days, employer-based health insurance was offered to workers in three sizes: single, couple, or family. It did not matter how many kids you had. Today, each dependent adds to the premium. So, the “slacker mandate” is paid for by the working parents. That is not really a problem for society.
However, it invites the question: Why mandate slacker coverage? Parents were always free to help their adult children pay for health insurance, just like they can help with rent or car loans. The only government-imposed discrimination was the tax exemption of premiums paid for minor children on a parent’s employer-based health plans; if a parent wanted to buy health insurance for an older dependent, he had to use after-tax dollars.
This bias could have been easily be remedied by a simple change in the tax code, instead of a mandate. The only reason for a mandate would be for politicians to transfer the cost of adult dependents’ health insurance from parents to non-parents, in order to promote a “free” benefit to the parents. If working-age parents are more likely to be politically involved than working-age non-parents (a reasonable claim), the mandate clearly benefits politicians.
A remarkable study published by the National Bureau of Economic Research concludes that this happened. The slacker mandate reduced wages among workers without children by $211 a month, but it did not reduce wages among workers with children (either minor or adult) by a statistically significant amount.
The latter result makes sense, because the working parents simply paid higher premiums to keep their adult dependents on their employer-based plans. The former result is shocking. How to explain it? I suspect it is easy in the short term to impose these costs on workers without kids because of the high information and friction costs to those workers of learning and responding to the cost of the mandate.
In the long term, childless workers can respond, but that adjustment would result in an equilibrium in which some companies had only workers with kids and other companies had only workers without kids, and there are surely many other costs that would inhibit such an equilibrium.
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For the pivotal alternative to Obamacare, please see Independent Institute’s book, A Better Choice: Healthcare Solutions for America, by John C. Goodman.