Obamacare and inequality: A healthy dose of redistribution

THE growing gap between rich and poor is a defining feature of 21st-century America. Barack Obama devoted time to the conundrum of income inequality in his state of the union speech last night, and pushed for raising the minimum wage. Yet he failed to trumpet a main way he is reducing inequality: Obamacare. Mr Obama did praise his health-care law, but its effect on redistributing income went undiscussed.By one measure, income inequality has widened during Mr Obama’s presidency. From 2009 to 2012 income for the top 1% rose by 31.4%, whereas the bottom 99% saw income rise by just 0.4%, according to a report from Emmanuel Saez and Thomas Piketty. However, this tally of income excludes taxes and transfers from the government, such as Social Security and health subsidies from Medicare, the health programme for the old, and Medicaid, the health programme for the poor. Americans received a whopping $1.5 trillion in net health-care subsidies in 2012, in the form of government programmes and employers’ contributions to health insurance. That $1.5 trillion was equal to 13% of Americans’ disposable income—that is, income minus taxes.Obamacare includes new taxes and dramatic changes in the subsidies for health care. These measures are expected to have an impact on income, broadly defined. For example, the law requires employers to offer health insurance, which may spur …

Link to article: www.economist.com/blogs/democracyinamerica/2014/01/obamacare-and-inequality?fsrc=rss

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload the CAPTCHA.