Will Obamacare be a $500 Per-Pupil Grant to Charter Schools? All Schools?

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This is a very speculative post, as I’m wading into unfamiliar policy waters (healthcare). If you’re an expert in the field, let me know if I got this all wrong.

But here goes:

1. This Jonathan Gruber video shows him making the case that the Obamacare Cadillac tax will inevitable hit most healthcare plans, which will result in more and more people going on Obamacare rather than employer based plans.

2. Nationally, teacher healthcare costs average $500 per-pupil. If you assume a rough average of 10K per-pupil being spent nationally, this is about 5% of total costs.

3. This article notes how public sector health plans will likely be hit by the Cadillac tax over the next decade.

4. So if we assume that by 2020, give or take, your average teacher health plan is hit by the Cadillac tax, then both charter schools and districts will have to either: (1) eat the tax or (2) push their employees to Obamacare.

5. Those that push their employees to Obamacare will basically be saving local and state dollars by having the federal government pick up their healthcare costs.

6. Given that Unions seem to be in favor of employer based healthcare for government workers, one can imagine that government operated schools will be much slower to make this transition to Obamacare (especially given Obamacare packages will likely be less generous than the average union package).

7. Charter schools will probably be more able to transition faster.

8. This could basically rest in a ~$500 per-pupil grant to charter schools, which is huge. The federal government currently covers about 10% of public schooling cost (around ~1K per student), so this would increase federal expenditures on public education by 50%.

9. Of course, district schools could receive this same grant if they were able to move their employees to Obamacare.

10. Lastly, in a textbook economic world, teacher pay would simply rise by whatever amount teachers lost in net income in the transition to Obamacare. But the world is not a textbook economic world, and you can imagine schools capturing some of this $500 per-pupil grant.

Alright, I’m sure I’ve got some of this (or all of it wrong).

Let me know.

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