Affordable Layoffs: The New Arithmetic of Middle-Class Assistance by Casey B. Mulligan

The ACA: the next big labor market event Employers may owe significant penalties, beginning in 2014 at as much as $3,000 per employee-year $3,000 penalty is equivalent to $4,569 wage expenses Employees may receive subsidies exceeding $15,000 per year After 2014, all of these amounts grow at the rate of healthcare costs, or faster. Penalties and subsidies are tied to labor market outcomes, and the ties will be experienced by the majority of the labor force --> Expect employees and employers to change their behavior to avoid penalties and enhance subsidies, especially when low-skill employees are involved

Most of the Middle Class: Reward to Work Eroded Those with employer insurance: non-employment triggers health insurance subsidies (reminiscent of ARRA’s COBRA subsidy) Those with exchange plans: new 20%+ (sic) addition to MTR due to sliding scale subsidy. Unemp. relieves employer from penalties. Those with no insurance: unemployment triggers hardship exemption from the individual mandate, and employer relief from penalties

AV/FPL subsidy appears when leaving ESI job, and lasts only as long as non-employment does subsidy enhanced when leaving non-ESI job, and the enhancement applies to the entire calendar year AV/FPL

Most of the Middle Class: Reward to Work Eroded Those with employer insurance: non-employment triggers health insurance subsidies (reminiscent of ARRA’s COBRA subsidy) Those with exchange plans: new 20%+ (sic) addition to MTR due to sliding scale subsidy. Unemp. relieves employer from penalties. Those with no insurance: unemployment triggers hardship exemption from the individual mandate, and employer relief from penalties

Affordable Care Act takes effect rough draft 2014- Affordable Care Act takes effect payroll tax cut expires