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July 6 2017

Heartless: ObamaCare Kills an Estimated 250,000 Jobs Nationwide

by Charlotte Hays

Health reform expert Casey Mulligan writes in today's Wall Street Journal that when Democrats decry repeal and replacement of ObamaCare as "heartless," they leave out the effects of ObamaCare on employment:

Democrats loudly complain that people will lose health insurance if the Affordable Care Act is repealed. They never mention those who lose jobs because the ACA remains.

The ACA includes a penalty on employers that fail to provide “adequate” insurance for full-time workers. Thanks to the ACA, hiring the 50th full-time employee effectively costs another $70,000 a year on top of the normal salary and benefits.

Many business owners have described how this penalty prevents them from hiring and has caused them to reduce work hours to below the full-time threshold. ACA supporters dismiss these statements as “mere anecdotes” not corroborated by national sampling and statistical analysis. But did any of them rush out to gather the national samples, especially after Jan. 1, 2016, when the employer penalty took full effect?

But now we have some idea. Mulligan teamed up with the Mercatus Center to enlist Hanover Research to get an estimate of the number of jobs killed by ObamaCare. They surveyed 745 small businesses from every major field.

Many managers, both Democrat and Republican, said that they deliberately kept employment below 50 to prevent ObamaCare requirements from kicking in. Managers admitted they cut hours and did not hire new people because of the Affordable Care Act. 

Based on these surveys, they estimate that the Affordable Care Act costs about 250,000 jobs nationwide. This will not get better:

The tally of lost jobs is bound to grow because the penalty itself automatically grows and the IRS is still learning how to enforce it. And the businesses we surveyed disproportionately say that they reduce hiring and hours for new employees rather than existing employees. They may continue to shrink until their payrolls are fully turned over.

Does the ACA at least spur small business to offer coverage? About a third of those now offering coverage began doing so after the ACA was passed. But two-thirds of those now not offering coverage previously did offer it. Some of the managers said the exchanges are a new option and that offering coverage at work would render employees and their families ineligible for taxpayer assistance.

No doubt a few of the 250,000 lost jobs are replaced at businesses that weren’t seeking to duck the 50-employee threshold. But even reallocated jobs are a problem, because the reallocation is motivated by uneven federal incentives unrelated to creating value in the marketplace.

The ACA is an important reason why the growth rates of employment, wages, productivity and GDP continue to be substandard. Maybe it is time for repeal.

I call that mean and heartless.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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