Is Obamacare a ‘job killer’?


Michael Nagle/Bloomberg

“Why not delay all of the mandates in Obamacare [which] has become such a job killer in our economy.”

–Louisiana Gov. Bobby Jindal (R), appearing on CBS’s “Face the Nation,” Feb. 22, 2014

Here we go again. Once again, another Republican politician has labeled the Affordable Care Act as a “job killer.”

Meanwhile, Health and Human Services Secretary Kathleen Sebelius recently blasted the whole notion of job loss during an appearance in Florida:

“There is absolutely no evidence, and every economist will tell you this, that there is any job loss related to the Affordable Care Act. Part-time positions are actually down since 2010, not up. The number of full-time workers continues to increase. I know that’s a popular myth that continues to be repeated, but it just is not accurate.”

We have delved into this issue before and find the certainty with which both sides hold their positions to be dismaying. Each side can point to data to make their case, even though the law has only begun to be implemented.

The Facts

On the face of it, one would expect the law to have some impact on jobs, especially at the margins, because of mandates that employers of a certain size provide insurance to employees. The administration has twice in the past year given certain employers extra time to meet these requirements, however.

Under new rules announced this month, employers with 50 to 99 workers will be given until 2016 — two years longer than originally envisioned under the law — before they risk a federal penalty for not complying. Companies with 100 workers or more are getting a different kind of one-year grace period. Instead of being required in 2015 to offer coverage to 95 percent of full-time workers, these bigger employers can avoid a fine by offering insurance to 70 percent of them next year.

The penalty for not providing insurance is $2,000 per person, after the first 30 full-time employees. There also is a separate $3,000-per-employee targeted penalty if the employer coverage is inadequate or unaffordable, though it can’t exceed the first penalty. Moreover, a full-time job is defined as just 30 hours per week. Lanhee J. Chen, a Stanford lecturer (and policy aide to the Romney campaign) in January told Congress that the 30-hour requirement may especially put lower-income workers at risk.

The majority of firms with more than 50 employees — about 96 percent — already offer health-care coverage, but not necessarily to all employees. By one estimate, derived from Employee Benefits Research Institute research by an Obamacare critic, 46 percent of the nation’s uninsured workers are employed by large firms.

The net result is that, certainly for some companies, the health-care law will be a burden and force new calculations on hiring and expansion. Each one of those companies is a potential news story. In fact, a new report by the Office of the Actuary of the Centers for Medicare and Medicaid Services predicted that 65 percent of small businesses would see their health-insurance premiums increase because of the health-care law, though 35 percent would see a decrease.

That’s why Republicans tend to cite anecdotal evidence, whereas the administration relies on broad overviews of the data. Generally, anecdotal accounts are less trustworthy than broader data sets, but the broader data can also obscure real-world impacts.

Thus, Mike Reed, a spokesman for Jindal, points to a series of news reports, assiduously collected by the Republican National Committee, to make the case that the Affordable Care Act is reducing jobs. In just about every case, a businessman or company blames the health-care law for cutbacks or a decision to reduce hours. We have embedded the document below.

ObamaCare Job Killer Claims Provided by Office of Gov. Bobby Jindal (R)

More recently, the trade group Advanced Medical Technology Association surveyed its members and claimed that the law’s medical device tax had resulted in a cutback of 14,000 jobs, with another 19,000 jobs unfilled. The Fact Checker has not vetted this survey, and the trade group is lobbying hard to have the tax repealed, so take the results with a grain of salt.

“It is an undeniable fact that Obamacare is costing this country jobs,” Reed said.  “Business owners have said over and over that Obamacare is causing them to lay off workers, hold off on the hiring of new workers, or delay the expansion of new business. The fact that the Obama administration keeps delaying certain Obamacare mandates on businesses proves that the administration knows this law is bad for job creation. Claiming that Obamacare doesn’t hurt job growth is about as laughable as President Obama promising, ‘If you like your health-care plan, you can keep it.’ ”

Meanwhile, there’s a reason why Sebelius cites “economists.” That’s because many don’t rely so much on anecdotal data but on actual trends in employment. Thus far, the data show that the impact of the law is minimal, though certainly some critics of the law have tried to document negative effects. (This article in Forbes from July has a lot of the back and forth on what the numbers might mean.)

Yet, for all of the anecdotal reports on the impact on part-time employment, here’s what the nonpartisan Congressional Budget Office said in a report published in February (page 125):

“In CBO’s judgment, there is no compelling evidence that part-time employment has increased as a result of the ACA.”  

The agency noted “anecdotal reports” of firms responding to the mandates in the law, and the fact that the share of workers in part-time jobs has declined relatively slowly since the end of the recession. But it said that the share of part-time jobs often declines slowly after a recession, so it was difficult to determine what, if any, impact the Affordable Care Act has had on the job situation.

As the CBO put it, “the current lack of direct evidence may not be very informative about the ultimate effects of the ACA.”

Moreover, the CBO determined that in the near term, the law will spur job growth because lower income households that will benefit from the law will have more money to spend on goods and services. (This same report also concluded that over time, the full-time equivalent of 2.3 million workers will leave the work force by 2021 because of the law, but that’s another story.)

The White House Council of Economic Advisers, in a September blog post, laid out the administration’s case, which presumably was the basis of Sebelius’s comment. The blog post notes that since the Affordable Care Act became law, the economy has created 6.5 million full-time jobs, while the number of part-time jobs has been essentially unchanged.  The post also cites economic data that back up CBO’s contention that the law has not prompted a shift toward part-time work.

One chart is especially interesting because so many anecdotal accounts suggest the law is killing jobs in the restaurant industry because few provide extensive health insurance and thus presumably would be more affected by the employer mandate. But the chart indicates employment growth in restaurants and bars has exceeded what one would predict from sales growth alone. In other words, those anecdotal stories may not be telling the whole story.


 The Pinocchio Test

A few months ago, we warned readers: “Pay little attention to such ‘job-killer’ claims.” We see no reason to change that assessment, especially in light of CBO’s conclusion that the data are too inconclusive to reach a conclusion on the question of part-time jobs.

At the moment, the administration appears to have a slightly better case in this debate. But officials such as Sebelius should resist making sweeping claims that there is “no evidence” of “any job-loss” related to the Affordable Care Act. Clearly, given the design of the law, there will be a negative impact at some companies, just as a certain percentage of people have lost plans that they liked. There are going to be some losers, even if there may be many winners, so it is hard to justify the use of words such as “myth.”

Jindal, in his comments, did not suggest that there was a net loss of jobs, only that jobs were being lost because of the law. Yet the phrase “job killer” is far too sweeping to make a relatively narrow point. He would be on safer ground to assert that some companies are suffering.

When this all shakes out in a few years, then we will know who was right. In the meantime, we trust the sober assessment of the CBO: It is too early to jump to conclusions. For the moment, we will hold off on the Pinocchios, but will keep an eye out for definitive statements from either side of this debate.

Verdict Pending

 


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Glenn Kessler has reported on domestic and foreign policy for more than three decades. He would like your help in keeping an eye on public figures. Send him statements to fact check by emailing him, tweeting at him, or sending him a message on Facebook.
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Glenn Kessler · February 25