Monday, November 21, 2011 10:45am

Healthcare

There are no consequential distortions created by the tax preference that favors obtaining health insurance through employers.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel
Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Strongly Disagree 7
Linking health insurance to (current) employment distorts both labor market choices and health care decisions.
Bio/Vote History
         
Alesina Alberto Alesina Harvard Uncertain 5
Bio/Vote History
         
Altonji Joseph Altonji Yale Disagree 5
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Strongly Disagree 9
Bio/Vote History
         
Autor David Autor MIT Strongly Disagree 8
We need consumers of healthcare to be *less* insulated from the price system, not more. The tax credit provides insulation and subsidy!
Bio/Vote History
         
Baicker Katherine Baicker Harvard Strongly Disagree 9
Creates distortion in both health and labor markets.
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Disagree 5
Bio/Vote History
         
Chetty Raj Chetty Harvard Strongly Disagree 9
Bio/Vote History
         
Chevalier Judith Chevalier Yale Strongly Disagree 10
There are giant distortions.
Bio/Vote History
         
Currie Janet Currie Princeton Disagree 8
Subsidizing health insurance through the tax system causes people to be "over-insured," and causes the system to cater to the over-insured.
Bio/Vote History
         
Cutler David Cutler Harvard Strongly Disagree 10
Note that this is not a welfare statement. Many of the distortions are good (eg pooling benefits). And welfare requires a counterfactual.
Bio/Vote History
         
Deaton Angus Deaton Princeton Strongly Disagree 10
Bio/Vote History
         
Duffie Darrell Duffie Stanford Disagree 2
This seems an indirect approach.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Strongly Disagree 9
just to name one distortion, dental insurance is often bought when few employees would pay that much with their own money.
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Disagree 4
Bio/Vote History
         
Fair Ray Fair Yale Strongly Disagree 10
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Disagree 9
Lowers the price of health insurance encouraging excessive health care spending. Contributes to rising h.c.costs. Benefits higher incomes.
Bio/Vote History
         
Goldin Claudia Goldin Harvard Strongly Disagree 5
There are many distortions of great consequence created by the policy.
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Disagree 9
Pretty clear directionally but question as to how impactful is the distortion in magnitude.
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Strongly Disagree 8
likely increases labor supply and causes "too much" health care consumption for insured. i THINK the "job lock" literature didn't find much
Bio/Vote History
         
Hall Robert Hall Stanford Strongly Disagree 7
Financing health care through employers is crazy. It's essential to move to a system where people pay for health, with some gov help.
Bio/Vote History
         
Holmström Bengt Holmström MIT Strongly Disagree 7
All selective subsidies create distortions.
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Strongly Disagree 10
Tax prefs create job lock, prevent formation of a more competitive health insurance mkt, & discourage insurance coverage among young workers
Bio/Vote History
         
Judd Kenneth Judd Stanford Disagree 8
One significant possible distortion is a reduction in labor mobility.
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Strongly Disagree 5
Lock in is inefficient and there is no good reason to use the tax code to subsidize health insurance purchases.
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Disagree 9
1. Subsidizes health spending. 2. Increases other marginal tax rates. 3. Reduces job mobility.
-see background information here
-see background information here
Bio/Vote History
         
Lazear Edward Lazear Stanford Strongly Disagree 9
The is much evidence on this point and alternative proposals that could remove distortions and provide better health care incentives.
Bio/Vote History
         
Levin Jonathan Levin Stanford Disagree 7
Bio/Vote History
         
Maskin Eric Maskin Harvard Disagree 8
The tax preference induces over-consumption of healthcare
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Disagree 8
Many well documented distortions, including differential treatment of people, and not available when people most need it.
Bio/Vote History
         
Obstfeld Maurice Obstfeld Berkeley Disagree 5
Bio/Vote History
         
Rouse Cecilia Rouse Princeton Disagree 7
It likely distorts both health care decisions and the composition of total compensation.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Disagree 7
Job lock distortion but not certain that tax preference is key factor making employers provide health care
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Disagree 6
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Strongly Disagree 9
This is pretty basic, as is the fact that the distortions (econ speak for costs to society) are huge.
Bio/Vote History
         
Shin Hyun Song Shin Princeton Uncertain 5
Bio/Vote History
         
Stock James Stock Harvard Disagree 6
Bio/Vote History
         
Stokey Nancy Stokey Chicago Strongly Disagree 8
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 6
Yes the tax causes distortions but without Obamacare or some equivalent, we need health insurance provided by employers.
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Disagree 7
It is apparent that linking insurance to employment is distortionary. Measuring the magnitude of these distortions is a challenge.
Bio/Vote History
         
Zingales Luigi Zingales Chicago Strongly Disagree 9
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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