How the 'Affordable' Care Act reduces economic output

John F. Kennedy said, "Ask not what your country can do for you, but what you can do for your country," while Bernie Sanders' platform appears to be "Who wants free stuff?"  The Progressive/Obama Democrats promise to deliver through ideology and legislation what we can have only through science and industry – a practice that goes back to Jack Cade's comic relief speech in King Henry VI.  There is meanwhile a scene in the original Gilligan's Island in which Gilligan, upon becoming the dictator of a banana republic, tells his people, "I promise you this, that, and the other thing."  Schemes of this nature always crash and burn when they run up against the basic, impartial, and nonpartisan laws of science and economics.

Consider for example a 50-year-old small business owner in the People's Republic of California who wishes to buy basic medical coverage.  I selected California because it is a typical progressive Democrat (Jerry Brown, Nancy Pelosi, Dianne Feinstein) pay-more-get-less garbage hole, and I used the ZIP code for San Jose.  If the person's adjusted gross income (AGI, before the standard deduction and personal exemption) is $47,000, the cheapest plan's monthly premium is $215.61.  If however the business owner makes another $1,000, the premium increases to $360.61.  In other words, the decision to earn another $1,000 costs $1,740 in after-tax money plus payroll taxes, federal taxes, and California's progressive income tax on the $1,000.

Matters become even worse at age 60.  If the person's AGI is $47,000, his or her monthly premium is $134.98, or less than that of a 50-year-old person (!).  If the person's AGI increases to $48,000, the monthly premium skyrockets to $547.98, or $4,956 per year more than he would have paid had his income been $47,000.

Now suppose this business owner brings in about $46,000 a year and is offered a $3,000 job.  He must tell the prospective customer, "No, I can't do the job for you because I will actually lose more than $2,000 on it."  If he wants to keep the customer's good will, he might even say, "I'll do it for $1,000 because that won't put me over the limit," whereupon the customer might reply, "No, I have to pay you $3,000 to get my own AGI below the limit."  Only in ObamaLand is there an incentive of this nature to turn down business and/or incur unnecessary business expenses, noting that, even under a progressive tax system, there is no point at which marginal income results in a catastrophic loss.

"There has never been, and there will never be, an ideology or business scheme that can deliver more value than it creates," Henry Ford wrote (Ford Ideals, 1922).  Applying this to the Obama Democrat mentality:

The demand of the disorderly element is practically that everybody be requested to raise fewer potatoes, and yet that everybody be given more potatoes[.] … If everybody does less work and everybody gets more of the product of work, how long can it last?

This case study has shown clearly that the ACA requests that self-employed workers grow fewer potatoes while it promises more potatoes for everybody.  We have already proven that the ACA punishes small business owners who make even a little too much money, which discourages economic activity and the resulting wealth for our society.  Hillary Clinton, meanwhile, admitted openly that the "Affordable" Care Act is an incentive for employers to cut worker hours to part-time to avoid penalties, while mandates for employers of 50 or more people to pay for health insurance are an obvious incentive to employ 49 or fewer people.  All these schemes end up in exactly the same place, and the country needs to wake up to this fact in time for the coming elections.

William A. Levinson, P.E., is the author of several books on business management, including an annotated edition of Henry Ford's My Life and Work, as well as manufacturing productivity and quality. 

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