Healthcare

Linking health insurance to (current) employment distorts both labor market choices and health care decisions.

We need consumers of healthcare to be *less* insulated from the price system, not more. The tax credit provides insulation and subsidy!

Creates distortion in both health and labor markets.

There are giant distortions.

Subsidizing health insurance through the tax system causes people to be "over-insured," and causes the system to cater to the over-insured.

Note that this is not a welfare statement. Many of the distortions are good (eg pooling benefits). And welfare requires a counterfactual.

This seems an indirect approach.

just to name one distortion, dental insurance is often bought when few employees would pay that much with their own money.

Lowers the price of health insurance encouraging excessive health care spending. Contributes to rising h.c.costs. Benefits higher incomes.

There are many distortions of great consequence created by the policy.

Pretty clear directionally but question as to how impactful is the distortion in magnitude.

likely increases labor supply and causes "too much" health care consumption for insured. i THINK the "job lock" literature didn't find much

Financing health care through employers is crazy. It's essential to move to a system where people pay for health, with some gov help.

All selective subsidies create distortions.

Tax prefs create job lock, prevent formation of a more competitive health insurance mkt, & discourage insurance coverage among young workers

One significant possible distortion is a reduction in labor mobility.

Lock in is inefficient and there is no good reason to use the tax code to subsidize health insurance purchases.

1. Subsidizes health spending. 2. Increases other marginal tax rates. 3. Reduces job mobility.
-see background information here
-see background information here

The is much evidence on this point and alternative proposals that could remove distortions and provide better health care incentives.

Many well documented distortions, including differential treatment of people, and not available when people most need it.

It likely distorts both health care decisions and the composition of total compensation.

Job lock distortion but not certain that tax preference is key factor making employers provide health care

This is pretty basic, as is the fact that the distortions (econ speak for costs to society) are huge.

Yes the tax causes distortions but without Obamacare or some equivalent, we need health insurance provided by employers.

It is apparent that linking insurance to employment is distortionary. Measuring the magnitude of these distortions is a challenge.