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Sorry Dr. Dean, Obamacare Is Not Creating New Jobs

Posted By Marguerite Bowling On September 21, 2011 @ 11:40 am In Obamacare | Comments Disabled

In recent interview [1], doctor and former Democratic National Committee Chairman Howard Dean tried to make the case that Obamacare will boost small-business job growth.

“But the fact is [Obamacare] is very good for small business. It’s incredibly good for small business,” said the one-time Democratic presidential candidate.

Incredibly, Dean breaks away from his liberal colleagues and the White House by backing the results from a recent McKinsey & Co. survey [2]. The survey was vilified for reporting that 30 percent of companies said they would drop employee health coverage once the taxpayer-subsidized health insurance exchanges from Obamacare start in 2014.

“Most small businesses are not going to be in the health insurance business anymore after this thing goes into effect,” Dean said after endorsing the survey results. “That’s going to be the biggest boost to small business that has been done in years and years and years,” he added, predicting that Obamacare will create 80 percent of all initial new jobs.

Dean is right that businesses could decide en-masse [3] to drop employee health coverage. Obamacare stacks the deck so that it will likely be more cost-effective for companies to dump workers into subsidized government health coverage—and pay a fine—rather than support exorbitant premiums for government-mandated benefit packages. But to argue that somehow this frees companies up to hire more workers is nonsensical.

Heritage analysts have detailed the many ways in which Obamacare will destroy job creation [4], starting with:

Costly Tax Hikes. Curtis Dubay writes [5] that Obamacare imposes numerous new taxes, fees and penalties, transferring more than $500 billion over 10 years from hardworking American workers and their families to Congress. That’s money that could be spent in the private sector for companies to take out new loans, expand businesses and hire new workers. Instead, bureaucrats in Washington will use it pay for new entitlements and costly subsidies.

Employer Mandate Fines and Compliance Costs. Labor expert James Sherk points out [6] that businesses with more than 50 workers must pay for the rising costs of health care coverage for their workers or face a penalty. Not only does this discourage smaller companies from expanding, but it also places mid-size businesses in uncertain territory. With the Health and Human Services Department still mulling what benefits must be covered in any health plan, companies have little idea how high health care premiums will go up in the next five years, making any business planning difficult. Additionally, the new administrative complexities from Obamacare will require many companies to incur more accounting and consulting expenses just to stay compliant with the law.

Less Opportunity for Low-Income Workers. Heritage analysts also note [7] that many Americans earning close to the minimum wage will likely see less hiring opportunities as employers are required to offer them costly health coverage. In fact, research by Katherine Baicker and Helen Levy found workers earning within $3 of the minimum wage have a higher risk of losing their jobs because of the employer mandate.

“It doesn’t take a Ph.D. in economics to understand that this health care law is not the prescription for curing an ailing economy,” says Heritage’s Nina Owcharenko [7]. What it will take is for Dean and others to admit that Obamacare was a mistake that must be repealed if companies have any chance of moving forward.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/09/21/sorry-dr-dean-obamacare-is-not-creating-new-jobs/

URLs in this post:

[1] recent interview: http://campaign2012.washingtonexaminer.com/blogs/beltway-confidential/dean-employers-will-drop-coverage-under-obamacare

[2] McKinsey & Co. survey: http://blog.heritage.org/2011/07/06/criticism-of-mckinsey-survey-on-employer-health-coverage-falls-short/

[3] could decide en-masse: http://blog.heritage.org/2011/08/25/employers-consider-dropping-health-coverage-under-obamacare/

[4] Obamacare will destroy job creation: http://www.heritage.org/Research/Projects/Impact-of-Obamacare#businesses

[5] writes: http://www.heritage.org/Research/Reports/2011/01/Obamacare-and-New-Taxes-Destroying-Jobs-and-the-Economy

[6] points out: http://www.heritage.org/Research/Reports/2011/07/Economic-Recovery-Stalled-After-Obamacare-Passed

[7] also note: http://www.heritage.org/Research/Reports/2011/01/Obamacare-and-the-Employer-Mandate-Cutting-Jobs-and-Wages

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