Obamacare discourages work — for better and for worse

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  • Maybe the best thing about Obamacare: decoupling health insurance from employment

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  • It’s bad if a policy ends up paying able-bodied people to sit on their couch, but we don’t know if that’s what #Obamacare will do

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  • Man does not live on food stamps and Aetna PPOs alone.

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Obamacare will induce people to drop out of the work force, a recent congressional study reported.

The Congressional Budget Office report, examining Obamacare's effects on the economy, predicted that the U.S. workforce would shrink by 2.5 million people. The cause: Low-income people get subsidies when shopping on Obamacare's health-insurance exchanges. This makes it easier for people to afford health care without a job or by working part-time.

Republicans and many conservatives treated this the same way they treat every effect of Obamacare: as some sort of economy-wrecking socialist disaster. Democrats and their allies in the media, meanwhile, celebrated the “liberation” of these workers.

So, what does this news really tell us?

First, the CBO finding reinforces the most basic conservative complaint about the liberal welfare state: it takes money from working people and gives it to those who choose not to work.

Obamacare taxes regular working people in all sorts of ways (curbing health-care deductions, taxing home sales, taxing people for not having enough insurance, to name a few). The millions of new subsidy recipients aren’t the disabled who can’t work, nor the unemployed who can’t find work, but people who have jobs and decide to leave them or scale back their hours.

When the left applauded this workforce shrinkage as a triumph of the welfare state, it reinforced the idea that liberals don’t see the inherent value of work. In some regions of the left, the vision of America seems to be this: half the population has the skills to find high-paying jobs, and the other half is kept secure, well-fed, and underemployed or unemployed.

But man does not live on food stamps and Aetna PPOs alone. Work is good. Idleness stunts personal development. Earned success is the key to happiness. Too many on the left ignore these truths.

Here, though, the right goes too far in the hubbub about the CBO report. Remunerated work is not the highest good. Just because a policy induces people to quit the labor force doesn’t make that policy bad. And just because people exit the workforce or significantly cut back their hours doesn't make them slackers.

Sure, it’s bad if a policy ends up paying able-bodied people to sit on their couch and play Xbox, but we don’t know if that’s what Obamacare’s insurance subsidies will do.

If a low-income mother is working – and paying through the nose for childcare – just because her job has insurance and her husband’s job doesn’t, then the family’s lot is improved by a policy that makes it easier for them to afford insurance outside of work, enabling her to stay at home with their children.

Or imagine a young employee at a tech company. He’s itching to get out and launch his own startup, but he stays in his job because he needs the insurance. This is bad for him, and bad for the economy deprived of his innovation.

Obamacare’s subsidies for the individual insurance market may be bad or good on net, but this particular aspect – freeing stay-at-home moms and would-be entrepreneurs from jobs they’re keeping just for the insurance – is a good thing, if you think stay-at-home moms and entrepreneurs are good things.

All of this is tied up with another good thing — maybe the best thing about Obamacare: decoupling health insurance from employment. Employer-based insurance is a relic of ill-conceived federal wage controls and tax breaks. The employer-based system not only keeps moms working against their wishes, it also decreases employee mobility.

The irony is that Obama blasted John McCain in 2008 for trying to end the tax code's distortions that favor employer-based health care. McCain wanted to kill the tax break for employer-sponsored insurance and replace it with a tax credit for any sort of insurance. This, Obama warned darkly, would lead to the “unraveling of the employer-based health care system.”

The greater irony, when liberals celebrate liberation from "job lock," is that most of Obamanomics – and much of Obamacare – heighten job lock and deter entrepreneurship.

Obama’s export subsidies and green-energy subsidies mostly go to bigger businesses. His regulations and mandates fall heaviest on startups and create barriers to entry.

Obamacare’s employer mandate strengthens the employer-based system, counteracting some of the bill’s other measures.

Partisan sniping will probably prevent a good discussion of the safety net's costs and benefits — and the value of work. That's too bad, because it's a discussion worth having.

Timothy P. Carney, a senior political columnist for the Washington Examiner, can be contacted attcarney@washingtonexaminer.com. This column is reprinted with permission from washingtonexaminer.com.

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About the Author


Timothy P.
  • Timothy P. Carney helps direct AEI’s Culture of Competition Project, which examines barriers to competition in all areas of American life, from the economy to the world of ideas. Carney has over a decade of experience as a journalist covering the intersection of politics and economics. His work at AEI focuses on how to reinvigorate a competitive culture in America in which all can reap the benefits of a fair economy.


    Follow Timothy Carney on Twitter.

  • Email: timothy.carney@aei.org

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