Thursday, February 6, 2014

Why The Recent Obamacare News is Not a Major Blow to Democrats

     Recently, a report by the non-partisan Congressional Budget Office (CBO) dealt a blow to Democrats and the Affordable Care Act.  Contrary to previous CBO reports that stated the law would create jobs and reduce the deficit (which the new report still maintains) this new report states the controversial health care law will cost 2.5 million jobs by 2024.  Republicans immediately jumped on this news as even more of an incentive to repeal the law.  The CBO has been a friend of the Obama administration in the past with positive outlooks regarding the healthcare law.  Now, the Obama administration is criticizing this report sighting various flaws. 

     According to the CBO report, the reason the Affordable Care Act will contribute to a decline in 2.5 million jobs in the next ten years is because, typically, individuals would keep their current job because they wanted or needed health coverage.  Now that the Affordable Care Act provides affordable health coverage with individual online exchanges and subsidies, individuals are no longer tied to a job that provides a stellar health plan.   

     Legislators and members of the media are having the wrong debate right now on this issue.  Instead of looking at this data from the perspective of a job killing statutory monstrosity, the debate should be focused on why health insurance should even be tied into one's employer.  No other nation has a health care system like the United States.  According to the Bureau of Labor Statistics, while the earliest form of employer based plans were back in the late 1700's, the modern form took shape around 1910 and, in 1942, with the passage of the Stabilization Act, modern health care was born.  In 1940, less than ten percent of the population had health insurance coverage.  What the Stabilization Act did was limit the amount of wage increases employers were allowed to grant.  By 1945, employer health plans could not be modified throughout an employment contract and by 1949, health insurance plans became a regular piece in collective bargaining.

     Why should health insurance be tied to one's employment?  Many states require drivers to possess car insurance yet employers do not provide it.  Healthcare is one of the most basic of human necessities.  The government has a genuine public interest to ensure individuals are insured because it would look disastrous if, as in the early 1940's, a large majority of the population did not have health insurance.  

     According to the Atlantic, "Economists believe there are people who are working today who would rather retire or reduce their hours but have remained in jobs because they need healthcare. With the changes brought about by Obamacare, they can get insurance readily through other means, allowing them to drop out of the workforce or cut down their time on the job."  Furthermore, the article states, "the [CBO] report doesn't find any evidence of another GOP talking point: that businesses are moving full-time workers en masse to reduced hours so that they don't have to pay for their insurance."

     The one issue Republicans should continue to hammer on and Democrats will have to defend is the subsidies the law provides.  Conservatives such as Michael Graham and Stephen Hayes of the Weekly Standard contend these generous subsidies are funding freeloaders who no longer wish to work.  As Rep. Paul Ryan (R-WI) stated recently, "By choosing to stay at home or cut back their hours, low-income workers will not get on the 'ladder' to economic success and will be stuck in a cycle of poverty."  While Democrats fire back that this freedom of no longer being tied down to an employer for health coverage provides individuals with a choice, they are still going to have to defend the idea of an even larger perceived welfare state.  

     The CBO report is not as bad as conservatives and the media are making it out to be.  The report demonstrates no evidence of employers firing employees or reducing hours.  However, it does hint that there is now a disincentive to work.  Individuals still need to maintain responsibility for their own lives but it is unclear to me why health insurance should be that incentive for folks to get out of bed in the morning.  If individuals can afford their lives on reduced wages, why not cut down on hours?  There are many who must work 40 plus hours a week just to put food on the table for their families and they are not "incentivized" by health coverage, but rather by a responsibility to provide.  The role of employer health care in the United States is a debate that has been overlooked and it is worth discussing.             

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