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The myth about job-killing Obamacare

FOR YEARS, Republicans have labeled President Obama’s Affordable Care Act a “job killer.” But as the essential elements of the law begin to phase in, conservative critics have become more specific, latching onto alarming stories about certain businesses cutting employees’ hours or declining to hire workers — all, apparently, because of the health-care law’s dictates.

As usual with Obamacare, it’s not that there isn’t something to be concerned about. But Republicans have blown the law’s potential problems so far out of proportion that their attacks sound like a “Saturday Night Live” parody.

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“Americans all over this country are suffering because of Obamacare,”Sen. Ted Cruz (R-Tex.) said last month. “It is the single biggest job killer in America.”

Well, here’s what the law requires: All firms that employ 50 or more full-time workers — or the equivalent in part-time workers — must provide health-care coverage to all of their full-time employees. If they do not, starting in 2015 the government will assess a fine based on the number of employees the businesses have. The fear is that companies on the cusp of hiring their 50th full-time employee might hold back. Other businesses might try to cut their employees’ hours.

The potential for some reduction in the availability of low-wage work is real. But mainstream economists aren’t seeing anything like the catastrophe Republicans have foretold, and they don’t anticipate a calamity, either.

That is because only 3 percent of small businesses — those with fewer than 500 employees — have more than 50 workers, so 97 percent of small employers are exempt from the law’s mandates. Meanwhile, virtually all large companies already offer health insurance to their employees. Aside from things such as reporting requirements, Obamacare’s mandates will directly obligate only about 1 percent of American businesses to do anything different.

In its oft-touted economic analysis of Obamacare, the Congressional Budget Office (CBO) calculated in 2010 that Americans will put in one-half of 1 percent less time at work with the law in place, a finding that Republicans have repeatedly used to attack the law. Yet, the CBO explained, its figure primarily reflects an anticipated change in how much people will want to work after they get more health-care options, not a change in employers’ demand for their labor because of the law. Economists argue that unrelated factors — particularly consumer demand for the products and services companies offer — still will dominate in hiring decisions.

There are other concerns. Some observers argue that uncertainty about how much health-care premiums will rise under the law could discourage hiring, at least until the cost picture is clearer to businesses. But there will be countervailing effects. People won’t be as locked into their jobs, since they won’t have to stick with certain employers to ensure they have health-care coverage. That will make it easier for people to move into jobs they’re better at, and it could promote entrepreneurship. With more reliable care, workers might better manage the symptoms of one-time or chronic illnesses, which could cut down on the number of sick days they take. And the health-care industry probably will hire more people.

The net effect is hard to predict exactly. But it won’t add up to anything close to Mr. Cruz’s employment apocalypse.

 
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