Notes From Babel

E.D. Kain’s comparison of McDonald’s healthcare with the government plan

with 2 comments

E.D. Kain’s critique of McDonald’s healthcare has been making the rounds. I have a problem with it.  E.D. is using the post-subsidy cost ($1,127), not the actual premium cost ($2,712)—a difference of $1,586 in the form of the government tax credit.  (Numbers taken from the Kaiser Foundation link in E.D.’s post.)  Is this a fair comparison? Perhaps E.D. is operating on the assumption, “hey, employer-provided care is ‘subsidized’ in a sense because it’s tax-exempt.  So it’s ok to compare one “subsidized” program with another.”  But not all subsidies are created equal. Besides, does a tax-exemption on a $20,800 salary really amount to anything?


Written by Tim Kowal

October 2, 2010 at 1:36 pm

Posted in Health Care

2 Responses

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  1. You must think employers spend nothing on their employee’s health plans beyond said exemption. If the employer’s contribution doesn’t count as a subsidy, then what is it?

    E.D. Kain

    October 3, 2010 at 11:16 am

    • The employer’s contribution is compensation, compensation that otherwise would be taxable income, but for the tax-exemption. That exemption is a government subsidy. But the employer contribution, again, is compensation. A subsidy (an unearned receipt of government funds for political or social welfare purposes) is certainly not the same thing as compensation.

      Irrespective of the foregoing, the analysis would still be incomplete, as it omits the amount of McDonald’s contribution, if any.

      Tim Kowal

      October 3, 2010 at 11:42 am

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