Governor Bredesen Got the Calculations Right

Alyssa Esquibel / October 25, 2010

In yesterday’s Wall Street Journal, Tennessee Governor Philip Bredesen explained how Obamacare has created a situation where the state government and many of its employees will find it mutually advantageous to the get rid of the employer-sponsored insurance program the state currently offers. As we have noted, Bredesen correctly acknowledges that it will be better for all parties if the state of Tennessee pays the fines involved with not offering an insurance program and subsequently dumps many of its employees onto the federally subsidized insurance exchange.

Here’s how the Governor’s insightful logic works: Beginning in 2014, state exchanges will offer large subsidies to individuals and their families who don’t receive health insurance through their workplace. Former Congressional Budget Office (CBO) Director Douglas Holtz-Eakin and Cameron Smith have brought attention to generosity of these subsidies, noting that “a family earning about $59,000 a year would receive a premium subsidy of about $7,200” beginning in 2014,” whereas “even a family earning about $95,000 would receive a subsidy of almost $3,000.” As Heritage analysts have suggested, employers and employees alike benefit from an employer dropping employer-sponsored health insurance and simply assisting employees in attaining health insurance (with the help of the subsidies) in the exchanges. (more…)