Jobs And Health Reform

by Stuart Shapiro

Economists Robert Hahn and Peter Passell have an insightful new analysis of the impact of the Affordable Care Act on jobs.  They note that there may be a small effect on minimum wage workers with large firms because they don’t currently offer health insurance to low wage workers.  This is a very small group of people.  The primary effect of the Act on the job market will be:

the law will subsidize insurance bought by individuals with moderate incomes. This should reduce the incentives of otherwise-reluctant workers – say, second-earners in families with young children and older workers below retirement age with minor disabilities – to enter (or stay in) the job market.

In other words, it may allow people who don’t want to work to not work since they won’t need a job in order to obtain health insurance.  It is hard to see how this is a bad thing.  It may actually free up spots in the labor market for those who would prefer the income of a steady job.  So the only involuntary job losses are small ones that will come because the law does not make fundamental changes in the health care system.

Note the political irony here. The law will only lead to involuntary unemployment because it was tailored to maintain the current system under which most people are insured through their employers – an approach that surely matches Republicans’ preference for minimizing the role of government. The alternative routes, replacing employer-based insurance with government insurance in the style of Medicare or creating a highly regulated private insurance market for individuals, would have slightly expanded job opportunities for low-wage workers by taking employers out of the insurance loop.

By: Stuart Shapiro

Stuart is a professor and the Director of the Public Policy
program at the Bloustein School of Planning and Public Policy at Rutgers
University. He teaches economics and cost-benefit analysis and studies
regulation in the United States at both the federal and state levels.
Prior to coming to Rutgers, Stuart worked for five years at the Office
of Management and Budget in Washington under Presidents Clinton and
George W. Bush.