Obamacare—a Job Killer

Cato Institute presents an article by University of Chicago researcher Casey B. Mulligan suggesting that Obamacare will have effects “beyond what the law intended, including the incentive to work.” Mulligan writes that, due to two separate ACA provisions, a specific group of workers—women, the young, and those already working 30-35 hours—are likely to have “their short-term financial reward to full-time work erased by the ACA.” By Casey’s estimates, three to four million workers will fall victim to these penalty provisions.

Mulligan writes:

Two separate ACA provisions can fully eliminate the reward to full-time work. The first, which is scheduled to be in full force in 2016, pertains to full-time employees of firms that do not offer health insurance: by cutting weekly work hours to 29, they save their employer the annual salary equivalent of more than $3,000, or, they save their employers the threat of even larger penalties. Women workers, young workers, and persons already working 30–35 hour schedules are especially likely to have their short-term financial reward to full-time work erased by the ACA. By my estimates, three to four million workers overall will fall victim to this penalty provision.

The second provision pertains to full-time employees at firms that do offer health insurance. Over 60 million workers obtain health insurance from their employer, not including workers who obtain health insurance from a family member’s employer. About half of them (26 million) are in families between 100 and 400 percent of the poverty line and therefore satisfy the income criteria for exchange subsidies. And 11 million of those are unmarried—so by definition cannot be covered by a spouse’s plan—and another 8 million of the married have a spouse that does not work or otherwise cannot obtain coverage through a spouse.

In other words, almost 20 million workers are ineligible for exchange subsidies solely because their employer offers coverage to full-time employees: these are the workers subject to the ACA’s implicit full-time employment tax (FTET). A 29-hour work schedule, on the other hand, would make them eligible for subsidies without creating any penalty for the employer.

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Debbie Young

Debbie, editor-in-chief of Richardcyoung.com, has been associate editor of Dick Young’s investment strategy reports for over three decades. When not in Key West, Debbie spends her free time researching and writing in and about Paris and Burgundy, France, cooking on her AGA Cooker, and practicing yoga.