Bredesen, Gruber, and employer coverage

Since I’m not a professional blogger, I can’t cover all developments in health care and comment on all opinions that appear in major papers. I assume readers who want that level of coverage are following Kaiser Health News and Igor Volsky of the Wonk Room. Of course there are other good bloggers, journalists, and sources (see my Google Reader bundles).

Anyway, I happen to have a few minutes and a reader specifically asked me to comment on one of the issues of the day. So, … today Tennessee Governor Philip Bredesen published an op-ed in the Wall Street Journal claiming that to show

how the economics of dropping existing coverage is about to become very attractive to many employers, both public and private. By 2014, there will be a mini-industry of consultants knocking on employers’ doors to explain the new opportunity. And in the years after 2014, the economics just keep getting better.

The consequence of these generous subsidies will be that America’s health reform may well drive many more people than projected out of employer-sponsored insurance and into the heavily subsidized federal system. Perhaps this is a miscalculation by the Congress, perhaps not. One principle of game theory is to think like your opponent; another is that there’s always a larger game.

Did Bredesen get his math right to back up his assertion that employers will find dropping coverage very attractive? Jon Gruber says, “No.” (Follow the link for the math.) Moreover, he concludes,

Bredesen, in other words, has it backwards. The Affordable Care Act will not lead to widespread erosion of employer-sponsored insurance. Rather, it will provide the necessary protection for those who are suffering from the erosion that is already taking place.

I’m siding with Gruber on this one. I’ve already written about how the ACA won’t erode employer coverage very quickly (it hasn’t in Massachusetts), though gradually it will (I’m talking decades). And that’s a good thing.

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