Health Care Law’s Negative Impact on Jobs and the Economy
While Treasury and other Administration allies are claiming that repealing the health care law will hurt the economy, it’s worth highlighting a new paper by former CBO Director Doug Holtz-Eakin and the American Action Forum explaining why the health care law itself will harm American jobs and businesses if not repealed. The paper raises several important issues:
- The Congressional Budget Office estimated that the law will reduce the amount of labor supplied to the American economy by about half a percent, due to individuals choosing not to work – or, as Speaker Pelosi famously claimed, the health care law will allow people to “leave your work” and go “be creative and be a musician or whatever.”
- The law includes perverse incentives for individuals NOT to work – because at some income levels, a family could lose $5,000 in federal health care subsidies by receiving an extra $1,000 of income.
- Many of the savings provisions in the law – for instance, the Medicare productivity adjustments, and the “Cadillac tax” on so-called high-cost plans – may not be achievable, thus leading to significant increases in deficits in both the short and long term.
For all these reasons, the health care law is likely to serve as a significant drag on economic growth for the foreseeable future, rather than the job-creation engine the Administration asserts.