Proposals from European and U.S. policymakers aimed at reshaping labor markets and health care drew sharp scrutiny during an interview with economist Casey B. Mulligan on Chicago’s Morning Answer, as Dan Proft pressed the case that government-led solutions often deepen the very problems they are meant to solve.
The discussion began with remarks from European Commission President Ursula von der Leyen, who recently unveiled a plan to boost productivity across the European Union by creating “talent partnerships.” Under the proposal, EU institutions would help match European employers with non-European workers through legal migration pathways, including a pilot program in India. Supporters frame the idea as a way to address labor shortages and demographic decline, while critics see it as a continuation of Europe’s long-running embrace of centralized workforce planning.
Mulligan argued that government-managed talent pipelines are unlikely to deliver the results promised. Drawing on his experience in academia and economic research, he said such programs often drift away from merit-based selection and toward politically driven priorities, producing outcomes that run counter to employer needs. In his view, labor markets function best when workers and firms respond directly to market signals rather than bureaucratic allocation.
He also questioned why European leaders are focused on recruiting workers from abroad while large numbers of able-bodied people within Europe remain outside the labor force. Mulligan suggested that welfare policies and other government incentives discourage workforce participation, and that addressing those disincentives would be a more effective first step than importing labor. Proft drew a parallel to the United States, noting that persistent job openings coexist with low labor force participation among working-age adults.
The conversation then shifted to domestic policy, specifically the future of Affordable Care Act subsidies that were temporarily expanded during the Biden administration. Congressional Republicans have declined to extend those subsidies, instead proposing reforms that would expand association health plans and give small businesses and employees more flexibility in how they purchase coverage. Mulligan, now serving as chief counsel for advocacy at the Small Business Administration, said the original ACA structure has disproportionately harmed small employers, who make up roughly half of the U.S. workforce.
He pointed to the failure of the ACA’s SHOP exchanges, which were intended to provide affordable, functional insurance options for small businesses but never gained traction. Subsequent layers of regulation, he said, have driven up costs even further, particularly in states that added their own requirements. Association health plans, by contrast, would allow small employers to pool risk and avoid many of the mandates that inflate premiums.
Mulligan also argued that the temporary subsidy expansions created economic distortions beyond health care. He said generous subsidies reduce incentives to work and hire, contributing to slower growth and weaker wage gains. According to his analysis, purchasing power for workers lagged several percentage points below historical norms during the Biden years, a shortfall he attributes in part to these policies.
A broader concern discussed during the interview was whether expanded subsidies could eventually undermine employer-sponsored insurance altogether. While only a small share of Americans buy coverage directly through ACA exchanges, Mulligan said pouring more taxpayer money into subsidized plans could encourage employers, especially smaller ones, to drop coverage entirely. Over time, that shift could move the system closer to a de facto single-payer model without an explicit legislative mandate.
Throughout the exchange, Mulligan emphasized that both Europe’s labor initiatives and America’s health care debates reflect a common tension between centralized planning and market-driven solutions. In his view, policies that expand choice, reduce regulation, and align incentives are more likely to produce sustainable growth than sweeping government programs designed to manage complex economic behavior from the top down.
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