I realize no one really cares what Jim Cramer thinks, but since he's broadcasting his nonsense out to the numb masses who actually tuned into this shriek-filled freakshow on Morning Joe, I think it's worth nominating him for the award of Liar of the Week over these remarks over what the health care law will and will not do to the economy.
Here's what he said:
CRAMER: This is a... look, I think the debate is a fabulous one to have, but it is completely taking away from the fact that we are going to have a hard time hiring once this plan is put in place. I've had a couple of CEO's come on just in the last few weeks. When you talk about whether they want to hire, this is what they bring up! You know Chipolte which may be one of the great job creators in this country and they pay a lot for their people. This is a company that is very forward.
When I asked them, I said what does Obamacare do for you? They just say, nothing we hope because the Supreme Court has got to say no to it. I mean, this is the front and center of what could derail the economy. […]
Health care reform in general! I'm just saying, look, the issue, the Catholic charities are front and center […]
Business leaders fear this more than anything. They don't want to hire. It's part of the underground economy that's going to develop because no one wants to reform the books, because of Obamacare.
And people have to recognize that this is a front and center issue for every CEO I deal with. And another reason they don't want to hire people here, is they want to hire there. They want to put the jobs in Asia. They want to put the jobs in Mexico, because they don't want to think about how much more it's going to cost them to hire a new person.
The gist of Cramer's assertion about the Affordable Care Act and the economy is this: Because employees will have to be covered on the employers' health insurance plan, they won't hire here. They will either go abroad or they will simply not hire.
This is absurd. If demand rises to the level where they need to hire employees, they will hire employees, and if there are higher costs associated with hiring them, they'll pass them through to consumers. Of course, we shouldn't forget that providing health insurance to those employees comes with a nice fat tax subsidy for those employers as well, and if they're small employers, that comes as a dollar-for-dollar tax credit reduction to tax liability, which makes it even more attractive.
That's the economic truth, whether Cramer wants to believe it or not. There's another truth, too. What employers seem to be struggling with is the reality of the very real moral obligation they take on in exchange for that health coverage. After all, there is an escape hatch for every employer. They can terminate all coverage to all employees, pay the penalty for not covering them, and send them all out to exchanges, or they can decide certain classes of employees will not be covered. Their only risk, of course, is that those employees will qualify for subsidized premium credits on the exchanges, which will trigger a penalty to the employer to cover part of the cost of the subsidy. That is a fixed cost, it's not all that onerous, but of course, it's not tax-preferred. They can choose to pay a penalty capped at $2,000-$3,000, or they can cover that employee, with some exceptions.
As an example, employees who are eligible for Medicaid and CHIP are pre-screened out of mandatory employer coverage and continue enrollment in those programs. This means those among the working poor, like Wal-Mart employees, for example, are not required to be covered under their employers' plans but will still be eligible for the exchanges. There are more in this white paper (PDF) prepared by the Society for Human Resource Management if you want the very wonky details.
It's interesting that Cramer cites Chipotle as an example of a company which would be adversely affected by the Affordable Care Act. According to Chipotle's "Careers" page, they offer "limited health, dental and vision benefits" to the first three tiers of what would appear to be full time employees. It isn't until the fourth tier that eligibility for full benefits comes up. I'm guessing here, but it's a pretty strong possibility that those limited benefits are part of a "mini-med" plan, which has a waiver on some aspects through 2014. Here's what happens in 2014:
- The mini-med plan will not qualify as a Qualified Health Benefit plan on 1/1/2014.
- Employees covered will have the option of shopping on the individual exchanges for a plan with the minimum specified benefits with associated premium credits, and some employees may qualify under the Medicaid expansion, depending on their income levels in 2013.
- Presumably, this will cause Chipotle to terminate their mini-med plan altogether and offer a plan with the minimum benefits to their employees, or they will continue the plan on some basis but pay the penalties for employees who are covered and not receiving the required coverage.
Whatever Chipotle decides to do about their plan design for these employees, it's not at all uncertain. They know what their options are and they will make a business decision.
What Cramer is trying to say here is something else entirely. He is arguing for the immoral stance that some employees of an employer should not have the right to adequate health coverage because the bottom line matters more than the employee. The eternal conflict between the bottom line and a responsibility to accept a tax subsidy with a moral decision to make sure all employees have access to health care.
Truly, the best thing that could happen in this country for all of us is to unbundle employment and health care. As it stands right now, employers simply get to a cost-benefit analysis and decide who should have access and who should not. In exchange for their contribution toward the cost, they get a huge tax preference. What if that tax preference was removed entirely, and all employees were shopping on those exchanges under the Affordable Care Act? How long do you suppose it would be before the private insurers were out of the picture entirely, and we could honestly look at a more efficient model like single payer, or Medicare for all, or at the very least, a Medicare buy-in option for younger Americans?
Jim Cramer took an opportunity to bash the Affordable Care Act on Joe Scarborough's show, but what he really did was highlight the next step in the process of health CARE (not insurance) reform, which is to separate employers from their employees' health care. Imagine. It wouldn't be a problem for Catholic bishops anymore because they wouldn't be able to interfere in their female employees' health care. And we could actually do something about health costs overall in a meaningful way.
A girl can dream, can't she?