Despite grim predictions from detractors that the Affordable Care Act would result in job losses and reductions in working hours, a new research paper from a leading economist at the Federal Reserve Bank of New York says otherwise. According to Dr. Maxim Pinkovsky, a specialist in microeconomics as it relates to health care policy:
[C]ounties with large fractions of uninsured (and therefore a large exposure to the ACA) before the enactment or the implementation of the ACA experienced more rapid employment and salary growth than did counties with smaller fractions of people uninsured.
Pinkovsky’s research also confirms findings from the Congressional Budget Office showing “no compelling evidence” that companies were reducing employee hours and increasing the number of part-time hires in order to skirt the law.
Of greatest concern was the mandate requiring businesses with over fifty full-time employees to provide health coverage. However, Pinkovsky found no significant reductions in the number of full-time employees. He writes that it is “very unlikely that the ACA substantially reduced employment in the areas that could expect to be most affected by it,” such as Texas. In fact, his research found that before implementation of the ACA, employment in the Lone Star State was on the decline – but after 2013, when the law went into effect, job growth rose “substantially.”
Another benefit of the ACA is its effect on what is known as “job lock.” Before the law went into effect, workers were often forced to stay in jobs that were unsatisfactory, low paying and/or didn’t make the best use of their skills because these companies furnished medical coverage. Because the ACA prohibits insurers from denying coverage because of “pre-existing conditions,” it has become easier for workers to move around, or even go into business for themselves. This has made the labor market “more efficient,” according to Pinkovsky.
However, many provisions of the ACA have yet to be implemented. One of these is the controversial “Cadillac Tax” on so-called “luxury” health plans. This would impose a tax of 40% on insurance companies offering health plans valued at $21,000 or more a year for families and $8,000 or more for individuals. The other problem is that the prices charged by the for-profit health care industry for medications, treatments and services have been going up faster than the inflation rate. This was one of the issues that the ACA failed to address in keeping the underlying profit-driven system in place, and there is little that current, bought-and-paid-for lawmakers are willing to do about it. Pinkovsky admits that the ACA’s “long-run impact on the U.S. economy remains to be seen.”
Nonetheless, the ACA is working reasonably well in providing health care benefits to greater numbers of Americans – and so far, has had positive effects on job numbers.
