Dec 16, 2019

Research on Government-Subsidized Health Insurance, Anti-Aid Provisions, Occupational Licensing in West Virginia, and Higher Education's Future in the Labor Market

Shannon Dailey Staff Writer

Reforming Government Subsidies to Private Health Insurance

Bradley Herring and Erin Trish | Research Paper

Because health benefits received from an employer do not currently have taxable income status, certain Americans with employment-based insurance enjoy coverage that is more generous than it otherwise would be. As a result, overall healthcare spending increases as people overconsume low-value medical care from these overly generous plans.

Bradley Herring and Erin Trish suggest that reforming how the government subsidizes private health insurance could prompt employers to switch to health plans that still satisfy the needs of their employees without going overboard.

The effects of these plans are distorted, one example being that the current tax exclusion favors older, sicker people, and younger people are worse off because of these distortionary effects. If steps are taken to limit tax exclusion, this could increase overall levels of satisfaction with medical care from all customers and an increased utility of the insurance coverage that finances it.

A Summary of the History and Effects of Anti-Aid Provisions in State Constitutions

Matthew D. Mitchell, Robin Currie, and Nita Ghei | Policy Brief

Despite their popularity among policymakers, targeted economic development subsidies don’t work as advertised. Indeed, the best evidence suggests that they actually undermine economic development, fiscal health, and good governance. History indicates that subsides can lead to corruption and even government fiscal crisis.

State constitutional framers have responded to these outcomes with anti-aid provisions. Properly structured, these constitutional prohibitions on subsidies do seem to have an effect on the size and scope of subsidies. However, the provisions have been repeatedly challenged and weakened over time, and some are stronger than others. They therefore must be periodically renewed and strengthened.

Matthew D. Mitchell, Robin Currie, and Nita Ghei examine the history and effects of these constitutional provisions at length in a forthcoming Mercatus working paper, and offer a short review of that work in this policy brief.

West Virginia Occupational Licensing

Matthew D. Mitchell and Emma Blair | Policy Brief

Matthew D. Mitchell and Emma Blair examine the nationwide issue of occupational licensing by looking through the microscope at West Virginia. In West Virginia, occupational licensing laws create a substantial barrier for certain populations, and that licensure does not seem to increase quality or safety of practices, but does in fact raise prices. Finally, they conclude that reform is difficult but not possible, and outline occupational licensing reform opportunities for anyone who values consumer protection, lower prices, and greater employment opportunities for all. 

Higher Education and the School-Work Mismatch in an Evolving Labor Market

Veronique de Rugy and Jack Salmon | Research Paper

Veronique de Rugy and Jack Salmon expound on the recent expansion in higher education funding. This increase in funding stems from widespread belief that a college education is a human capital investment that acts as a social signal leading to higher pay over a lifetime. De Rugy and Salmon challenge this view, writing about the flattening payoff of a college degree and asserting that the future labor force will prioritize skills over degrees, requiring a demand for more nontraditional and vocational education options. 

Support Mercatus

Your support allows us to continue bridging the gap between academic ideas and real-world policy solutions.Donate