Will "Obamacare" Create Two Americas?

"The dirty little secret of this plan-which wouldn’t be a secret if opponents of this legislative package weren’t distracted by a dozen other wrongheaded policies in it-is that it will bring a major and irreversible upheaval to America’s labor markets. In a time of economic tension, this plan will displace millions of workers and push more people into becoming contract employees, resulting in increased instability for working families.

"One of the many original stated goals of the White House’s health care reforms was the promise that you can keep your health plan if you like it. However, the White House wanted to give businesses much-needed relief from burdensome health costs. Like the desire to create a new entitlement while reducing the budget deficit, these aims are nearly impossible to reconcile, so Obama chose a path that accomplishes neither.

"The president’s plan penalizes an employer for not providing insurance, but the government will subsidize the health care of workers without employer-provided insurance. This effectively allows workers to receive the same compensation package they get today, but with government footing the health-benefits part of the bill, so employers have no need to make up the difference in cash.

"The economic benefits of that subsidy far outweigh the penalties-for low income workers, it can result in an enormous difference of over $17,000 per year.

"It’s obvious what will happen under this plan: it will not make economic sense for any small business which employs lower-income workers to offer health insurance. And any small business which does so will almost certainly fail, burdened by higher costs than their competitors.

"This dilemma could be solved by making the penalties more draconian, but that too would cause business failures, and as with the individual insurance mandate, too steep a penalty would make the plan even more coercive and unpopular."