Wednesday, November 6, 2013

Two Studies on the Consequences of Romneycare

My paper cited a few studies of the Massachusetts economy before and after Romneycare. Here a few more:

I found that Romneycare increased the Massachusetts marginal tax rate on labor by an average of 0.4 percent points (of total compensation).  From my perspective, I'd expect the Romneycare employment impact to be somewhat smaller than the 0.6% cited above: perhaps 0.2 or 0.3%.

Given that Obamacare increases national average marginal tax rates by about 5 percentage points (about 12 times more than Romneycare did in MA), trying to extrapolate the Massachusetts experience to the ACA -- as many ACA advocates do -- is bold exercise in extrapolation.  But if you absolutely had to extrapolate that way, I'd multiply the Massachusetts results by a factor of something like 12: the ACA's employment impact would be in the -2 to -4 percent range.

Multiplication by twelve is sensitive to all kinds of second order errors like rounding errors and I don't recommend it. We have MUCH better ways of forecasting the ACA's consequences.  Stay tuned for those.

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