Why Health Reform Isn’t A Job Killer

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"Why Health Reform Isn’t A Job Killer"

A central component of the GOP’s argument for repealing the Affordable Care Act and replacing it with some yet-to-be-determined alternative is that some of the new requirements and regulations in the law will eliminate jobs and hurt small businesses. “What we believe is that Obamacare has been a job killer,” House Majority Leader Eric Cantor (R-VA) explained this morning on MSNBC’s ‘Morning Joe.’ “If you look at what’s going on in the regulatory arena in this town, the agencies have followed up the passage of that bill by implementing some real job killing regulations,” he added:

CANTOR: Where we’re putting our energy, as you said Mika, is jobs. And the one thing we keep hearing from small businesses and large is the Obamacare bill is chalk full of rules and regulations in the agencies that have now provided big disincentives for hiring. That’s part of what’s going on in this economy, is folks’ uncertainty where Washington is going next in the health care arena. That’s why we’re going to see a health care repeal bill come across the floor next week in the House.

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But none of this makes a whole lot of sense. Since President Obama signed health care reform into law on March 23, 2010, the economy created 117,000 jobs per month, leading to a total of 935,000 new jobs in the private sector and economists estimate that the savings from health care reform could add even more. That’s because employers respond to rising costs by reducing benefits and lowering wages. But, since firms can’t significantly lower wages for employees at or near minimum wage or workers who are in fixed contracts, rising health care costs also lead to job losses. One study found that every 10% increase in health costs that are above GDP growth leads to 120,000 fewer jobs. Economists predict that reform will lower health care spending (CBO says that reform will reduce average premiums for employers with more than 50 employees by between 0 and 3%) and estimate that it has the potential of creating somewhere between 250,000 and 400,000 jobs — positions which will never be available if the measure is repealed.

This isn’t to say that businesses aren’t anxious about rising health care costs or the impact of the various health care provisions on the bottom line. But thus far, HHS has been quite flexible in how it implements the measure, granting businesses that can’t meet the new requirements temporary waivers and exemptions that would allow employers to change gradually and prevent immediate cost hikes. In the interim, a growing number of employers have taken advantage of the tax credit that allows businesses with fewer than 25 workers and average wages under $50,000 to deduct up to 35% of the cost of the premiums they provide for their employees and many are receiving money from the law’s reinsurance program, which assists employers with retiree health costs. The law also invests in Community Health Centers, which could create an additional 300,000 jobs in the neighborhoods that need them most and in 2014, small businesses can take advantage of the new health insurance exchanges to pool resources and lower costs by covering their workers through a larger risk pool. All this would free up dollars that could then be used for job creation.

So the burden of proof is on the GOP — since reform has been enacted, which jobs have been “killed”?

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