One of the most contentious issues brought up by the Congressional Budget Office report on the Affordable Care Act is the job losses. It is by design that the Affordable Care Act allows people to choose to turn downsize their job and replace their employer sponsored health care plan with an equivalent one from the exchange. There are people who have valid medical or personal reasons who want to pursue this path. These are intentional job losses and probably desirable. The problem is keeping the people who really do not have a valid reason for downsizing their job from pursuing this strategy. As much as we might want to compassionately encourage the former group to downsize, we really want to discourage the slackers from going down this path. Unfortunately the Affordable Care Act does not really have a plan of disincentives for these prospective slackers. If we really believe we can grow out of our economic mess and pay for an expanded health care system then we must minimize the number of slackers. Before the Affordable Care Act transforms our health care system in to a “Mini-Me” version of the European system, it may be a good time to revisit Planet Money’s podcast, Germany’s Painful Unemployment Fix, and Germany’s use of incentives and disincentives to bring down unemployment rates. It is ironic that the reforms that made Germany’s labor market look more like the labor market in the U.S. may eventually be adopted by us as our welfare state repeats the same mistakes Europe made. Oy vey!
For a more scholarly review of the impact of the ACA on employment you can read Rea Hederman’s article, ”Incentives Matter: Why Estimated Job Losses Under Obamacare Have Tripled” and University of Chicago economist Casey Mulligan’s paper, “Average Marginal Labor Income Tax Rates under the Affordable Care Act”.