Will the Affordable Care Act spur economic growth

2013-03-04T00:00:00Z Will the Affordable Care Act spur economic growthGrace-marie Turner Arizona Daily Star
March 04, 2013 12:00 am  • 

ALEXANDRIA, Va. - With unemployment high and economic growth shrinking, it is clear the economy is headed in the wrong direction. The Affordable Care Act is a major cause.

Employers are resisting hiring new workers, at least partly to avoid the high costs of the law's mandated health coverage. The health law will require all employers with more than 50 workers to provide health insurance or pay a fine of $2,000 to $3,000 per worker every year.

These added costs rob companies of money to grow their businesses and hire new workers. Small businesses - usually the nation's most robust job creators - will be hit hardest, and many say the requirement would wipe out their profits. This means less money to build restaurants and stores, reduced investment in research - and fewer new jobs.

Before the law passed, optimism was high that health reform would cure the economy's woes. In 2009, the president's Council of Economic Advisers concluded that health reform would reduce unemployment, raise the labor supply and improve the functioning of labor markets.

But experience already is proving the report wrong. Consider these jarring developments:

• Many large firms are replacing people with technology, such as electronic checkout stations and ordering kiosks, and they are putting full-time workers on part time to avoid the health-care penalties.

• Smaller companies are holding back on hiring so they don't hit the magic number of 50 employees that triggers the employer mandate.

• There are fewer incentives for people to enter the workforce - even if they could find jobs - because they know they can get generous subsidies for health insurance whether they work or not. The Bureau of Labor Statistics reports 8.5 million people left the workforce during President Obama's first term.

Some argue the health-care legislation cannot be blamed because most of its major provisions don't take effect until next year. But businesses must plan for the future. Employers will not hire permanent full-time employees this year if they know they can't afford the added costs of paying for their expensive health benefits next year.

The Wells Fargo/Gallup Small Business survey recently reported that 61 percent of small businesses point to worries about the potential cost of health care as the reason they are not hiring.

Additionally, most are disappointed in the promises of health reform. The president said his law would reduce the average cost of a family policy by $2,500 by the end of his first term. Instead, family health costs have increased by $3,065.

The best thing that Congress could do to stimulate economic growth and jobs creation would be to repeal the health law and go back to the drawing board, creating a law that would increase access to health insurance and stimulate genuine market competition to lower health costs without the huge distortions that the law inflicts.

No, it will hurt small business most

Editor's note

Every Monday we offer pro/con pieces from the McClatchy-Tribune News Service to give readers a broad view of issues.

Grace-Marie Turner is president of the Galen Institute, a free-market organization funded in part by the medical industry.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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