ObamaCare Subsidies Could Kill Your Plan

The expansion would mean employers have an incentive to stop offering coverage

By Chris Pope. He is a senior fellow at the Manhattan Institute. Excerpts:

"The ACA aimed to help low-income working households that lacked an offer of job-based benefits. But the ACA’s reforms made policies unappealing to customers paying full price. Healthy Americans stopped buying plans, premiums more than doubled, and insurers hiked deductibles and stopped covering the best hospitals."

"whereas the ACA’s original subsidies were on average worth $293 (5%) less to households than the value of the tax exemption for employer-sponsored insurance, the expanded subsidies would be worth $3,960 (65%) more. That creates a huge incentive for employers to stop offering health benefits."

"From 2019 to 2025, the share of companies with 50 or more workers offering benefits declined from 94% to 91%, and the proportion of those with 10 to 49 workers fell from 67% to 54%." 

Small Businesses Can’t Escape Price Controls

The Biden administration’s legacy is choking off tomorrow’s small-business breakthroughs before they leave the lab, writes Casey Mulligan.

Letter to The WSJ. 

"Tomas Philipson ably details how “Biden’s IRA Is Harming Cancer Patients” (op-ed, Dec. 1). Those who had a bit of economics training would have seen that coming. It doesn’t matter whether it’s rent control, groceries or healthcare—government-imposed price ceilings curtail investment in maintaining and improving the quality of consumer products. In the pharmaceutical industry, that means fewer new drugs to improve health and longevity, and fewer discoveries of how to use existing medicines better.

Small businesses drive innovation because they are less bureaucratic and have fewer worries about protecting existing products. They are the least able to survive a policy that shortens effective patent lives and caps prices as their discoveries approach the market. According to the 2023 Business Enterprise Research and Development survey, about 2,970 small firms are engaged in U.S. biotechnology research and development. Their business models depend on a handful of potential “home run” projects. When price caps truncate the payoff window, many of their projects never get financed or are abandoned.

The Biden administration’s legacy not only harms cancer patients; it’s choking off tomorrow’s small-business breakthroughs before they leave the lab.

Casey B. Mulligan

Washington

Mr. Mulligan is chief counsel for advocacy at the Small Business Administration." 

We Haven’t Stopped Paying for the New Deal

‘Far from ‘right-sizing’ the government, FDR expanded it into areas it was never supposed to tread,’ writes Robert E. Wright.

Letter to The WSJ.

"Younger generations have learned—despite what their history textbooks have repeated ad nauseam—that government policies caused and exacerbated the Great Depression. The New Deal wasn’t only unnecessary to achieve what David M. Kennedy calls “the conditions of modern society” (Letters, Dec. 10). It hurt many Americans then and continues to do so today.

Far from “right-sizing” the government, FDR expanded it into areas it was never supposed to tread, including retirement annuities, healthcare and higher education, all of which unsurprisingly constitute the most dysfunctional parts of the modern economy. In the process, he also weakened the Bill of Rights, impoverished blacks and stymied women’s return to the workplace.

 

Devaluation of the dollar alone induced the economy to rebound strongly off the March 1933 bottom. All the rest, including the National Recovery Administration, gold confiscation, the Tennessee Valley Authority and endless other top-down tinkerings slowed or reversed the initially robust expansion.

Many other New Deal programs stymied subsequent market development. Most tragically, perhaps, rural electrification held back green-energy technologies, including windmills and batteries, for decades. In many areas, like southern Alabama, the program subsidized the electrification of the summer homes of the wealthy more than it aided farmers. I could go on.

Robert E. Wright

Mount Pleasant, Mich.

Mr. Wright is author, most recently, of “FDR’s Long New Deal.”"

Where Are Those Manufacturing Jobs?

The jobs market is so-so, but tariffs are hurting domestic companies that make things

WSJ editorial. Excerpts:

"private employers aren’t laying off workers in large numbers but they also aren’t hiring all that many. The question is why?"

"Our main suspect is the impact of tariffs and the uncertainty Mr. Trump’s willy-nilly border tax policies have caused."

"Remember when tariffs were supposed to produce a U.S. manufacturing boom? It hasn’t happened. In January BLS reported 12,755,000 workers in all manufacturing industries. The number rose by a few thousand through April, but then began to fall each month and in November hit 12,697,000. That’s a net loss of 58,000 jobs, including 19,000 in the last three months."

"Further evidence comes from the industries affected most by Mr. Trump’s tariffs of 50% on steel and aluminum and 25% on autos and auto parts. Employment in motor vehicles and parts fell 15,000 since January, while it remained flat in steel-making and aluminum manufacturing." 

Europe’s Green Energy Rush Slashed Emissions—and Crippled the Economy

Political consensus is cracking, industry is hobbled and high-profile projects are being postponed thanks to some of the highest electricity prices in the developed world

By Tom Fairless and Max Colchester of The WSJ. Excerpts:

"European politicians pitched the continent’s green transition to voters as a win-win: Citizens would benefit from green jobs and cheap, abundant solar and wind energy alongside a sharp reduction in carbon emissions.  

Nearly two decades on, the promise has largely proved costly for consumers and damaging for the economy."

"Germany now has the highest domestic electricity prices in the developed world, while the U.K. has the highest industrial electricity rates"

"Average electricity prices for heavy industries in the European Union remain roughly twice those in the U.S. and 50% above China."

"“We are hemorrhaging industry,” said Dieter Helm, an economic policy professor at Oxford University who has advised U.K. governments on energy policy. 

British chemical company Ineos said in October it would close two plants in western Germany because of high energy costs."

"a good chunk of the increase is thanks to the shift to renewables, say business executives and some economists."

"While sunlight and wind are free, harnessing them entails significant infrastructure investments, including in battery storage for when the sun isn’t shining or the wind blowing, and vast redundant capacity. These additional costs, obscured by subsidies and carbon taxes, mean energy prices in places like Germany and the U.K. are likely to remain higher than other countries for years to come, some economists say. The stubbornly high prices, Helm said, suggest it’s the overall system cost driving prices."

"a “clean power” system in the U.K. would only start saving bill payers money from 2044. It’s a similar story in Germany."

"High-profile net-zero projects are being postponed or scrapped, notably those involving green hydrogen, which the EU placed at the heart of its green plans as a possible fuel for heavy industry and means of energy storage."

"Europe  . . . raced to replace fossil fuels with solar, wind and biomass by taxing carbon heavily, subsidizing renewables and closing scores of fossil-fuel power plants."

"Britain . . . became the first large industrialized country to shut all of its coal-fired power plants. It has also banned new offshore oil-and-gas drilling."

"European consumers and businesses are . . . at the mercy of electricity prices linked to the cost of imported fossil fuels while also shouldering big upfront costs to overhaul grids to handle the intermittent renewable power." 

"British . . . electricity costs . . . are 80% higher than the U.S."

"In earlier energy transitions . . . countries continued to use the outgoing fuel while adding the new fuel on top."

"If European factories close as a result of high energy costs, their production is likely to be replaced by imports from places like China, where the carbon footprint for those products is far higher"

"Parts of the green transition have proved unexpectedly costly. When Scotland’s biggest offshore wind farm opened in 2023, it was feted as a symbol of Britain’s push into a new era of cheap low-emissions energy. But today, British taxpayers spend tens of millions of pounds a year for the Seagreen wind farm to not produce electricity. 

Why? If the wind farm was left constantly on, it would send big pulses of energy from northern Scotland to southern England that would fry the U.K.’s aging grid."   

Price controls and taxes reduce investment in the pharmaceutical industries in the U.K.

See U.S., U.K. Strike Deal on Higher Drug Prices: Move marks victory for Trump administration campaign to get other countries to pay more for drugs by Natasha Dangoor of The WSJ. Excerpts:

"the U.K. was already under pressure from some of the world’s biggest pharmaceutical companies, which said in recent months that they are pausing new investments in the country. The companies cited uncompetitive drug-pricing controls that mean Britain spends far less on medicines than its peers. The U.K. spends 9% of its health budget on drugs versus a global average of 15%, according to the Association of the British Pharmaceutical Industry"

"In September, Merck scrapped a half-built $1.3 billion London research center and AstraZeneca, the country’s largest company by market capitalization, paused a $260 million investment in Cambridge."

"it has been losing this advantage. In 2009, Swiss pharma giant Novartis operated seven sites in the U.K., two of which were manufacturing sites, and employed 4,000 people. It now has one site, focused mostly on commercial operations, with 1,200 employees."

"The pharmaceutical industry in the U.K. is also battling a high clawback tax under which as much as a quarter or more of revenues from high-value drugs are given back to the government, compared with a far lower level in most European countries" 

The Climate Crisis Clashed With Affordability, and Affordability Won

Politicians and CEOs are muting their climate alarms. The good news is, emissions are likely to decline anyway.

By Greg Ip. Excerpts:

"The share of respondents calling climate and the environment their most important issue has dropped from 14% in early 2020 to 6% now" 

"25% describe inflation that way."

"climate advocates routinely . . . cast global warming as a doomsday machine that required an immediate, whole-of-society response."

"Biden officials implicated climate in everything from racial inequality to civil strife in Syria and Yemen. Democrats pressured financial regulators to discourage lending to the fossil-fuel industry."

"In a letter to investors in March, BlackRock’s Fink wrote: “Prosperity is once again defined by our ability—and our willingness—to produce and consume more energy.” He did not mention climate."

"Roger Pielke, a longtime climate scholar at the American Enterprise Institute, notes U.S. emissions have been remarkably impervious to presidential terms: relative to economic output, they have declined steadily for decades."

"Natural gas from shale hastened the demise of coal"

"Climate advocates used to claim that without radical policy shifts, temperatures would rise 4.5 degrees. But Pielke notes that those predictions were never plausible, and today few subscribe to them."

"the statement released at the end of last month’s climate conference in Belém, Brazil said the world was headed for a rise of 2.3 to 2.5 degrees by 2100. Pielke called that “serious, but not the apocalypse.”"