Why Obamacare Could Be Bad for Jobs

The Patient Protection and Affordable Care Act, also known as Obamacare, is one of the most groundbreaking forms of social legislation passed in the past fifty years or even arguably since Medicare. Obamacare has developed into one of the most polarizing issues from politicians to economists to doctors and everyday American citizens.  Since its debut in March 2010, how has the Affordable Care Act affected our economy? Mike Patton, a contributor for Forbes magazines, raises a tentative red flag.

Before diving into how Obamacare affects the economy one must first understand a key rule within the law that states “employers with 50 or more employees who work 30 hours or more each week must be covered by an approved health insurance policy.” Hypothetically speaking, if you are a business owner you understand the additional costs that Obamacare would place on your business and therefore might search for ways to avoid having to be covered by an insurance policy. In order to do this you could reduce the number of hours each employee works or reduce the number of employees all together. All of these steps would help save your profit margin which would have been drastically upset by implementing an approved health insurance policy.

Looking at this issue more broadly in terms of the economy, Obamacare will induce a sense of uncertainty among business owners, which is the opposite of what a struggling economy needs; the more uncertainty in business the less start ups and less growth from existing businesses as they seek to lower expenses.  The effect of Obamacare on the economy is a perfect example of unintended consequences. The ultimate effect on the economy is not promising or positive as employers have to readjust their workforce in the hopes of not hitting the dreaded 50 employees or 30 hours a week. Although intended to provide a wider range of coverage for Americans, Obamacare is likely to raise the cost of labor, discourage hiring and encourage reducing overhead.

According to John C. Goodman, another contributor for Forbes magazine, Obamacare has the potential to cause a loss of four million jobs. Goodman states that the Affordable Care Act does not increase supply at the same proportion that it increases the demand for care.  The demands for care are widespread with a long list of preventive services Americans are now insured for that does not require a copayment or deductible. As a result doctors offices are over-crowded as these free “wellness checkups” every year are taking up doctor’s times and valuable resources.

There is no clear-cut solution. Although the aim of Obamacare is to increase the number of Americans covered on insurance, at what cost do we continue to implement this plan? The negative consequences of Obamacare are shown in relation to the economy as it add an unnecessary burden to business owners as well as additional uncertainty that is an unstable starting point for the creation and maintenance of businesses.

One thought on “Why Obamacare Could Be Bad for Jobs

  1. Chris Rockwell

    Good point, providing a service such as universal healthcare certainly has a cost. Is there any way you could quantify this? An aside, I disagree that the American economy is “struggling.”

Leave a Reply