Health Care Ping Pong

If only there had been some sort of debate on what was in the health care bill. [Link]

We clearly haven't figured out a good way to going to handle the (fairly large) problem of intra-year variations in income.  We just paid for the 2010 "doc fix" by requiring families who experience a mid-year boost to their incomes to repay at least some of the subsidy they received when they had lower incomes earlier in the year.  Families who improve their job prospects will thus get to enjoy a privilege previously mostly reserved for freelancers: a surprise tax bill at the end of the year, when they were expecting a refund.

This is more than fiscally tricky (the sort of families that get subsidies are less likely to have thousands of dollars in the bank to repay them at year end).  It means that lower-income workers will implicitly face a higher marginal tax rate on their wages, since getting a new job may mean a hefty tax bill at year end.  For those even lower down the income scale, it means bouncing on and off Medicaid--and while I presume the private option will be better than Medicaid, the uncertainty and hassle may encourage them to stay put at lower wage rates.

This is the problem with complex new programs that aim to do everything:  it's hard to predict ahead of time how all the moving parts are going to work together.  There are still a whole lot of kinks to be worked out before 2014.