July 25, 2017


Fears Obamacare Would Be a Job Killer Were Wrong, Study Finds (Michael S. Derby, 7/25/17, WSJ)

Projections that the Obama administration's signature health-care legislation would drive workers out of the labor force have proved wrong, according to a new paper by researchers at Stanford University. [...]

[S]everal years into the ACA's implementation, the CBO's expectations have not been borne out, the researchers found.

While the paper noted a "substantial" increase in those who gained health insurance, "our findings indicate that the average labor supply effects of the [Affordable Care Act] were close to zero."

The paper's findings "weakens one of the arguments against the ACA," that it was a job killer, Mr. Duggan said in an interview. Based on the evidence, the law "doesn't look like it hurts the economy." [...]

Among critics' arguments against the ACA was that government-subsidized access to health insurance and expanded access to the government-provided Medicaid health-coverage program would cause some workers to leave the labor force, because they would no longer have to rely on employer-provided plans. Supporters of the legislation said it could create jobs because entrepreneurs would be able to start their own firms without worrying about going without coverage.

Any ACA-driven reduction in labor force participation would have come on top of a long-running decline driven largely by the retirement of baby boomers, and would be an unwanted, additional headwind to economic growth.

Drilling down, the paper found the law drove people to make different choices about work. "Middle-income individuals reduced their labor supply due to the additional tax on earnings while lower income individuals worked more in order to qualify for private insurance," the authors wrote. "In the aggregate, these countervailing effects approximately balance" in terms of their impact on overall participation rates.

While the paper finds the CBO projections were wrong, Mr. Duggan stressed that he has no issue with the agency's work. "Their estimates are quite reasonable" and many of the CBO's Obamacare forecasts were right on the money, he said.

Posted by at July 25, 2017 10:29 AM