After all the noise regarding the Congressional Budget Office's latest report on health care reform’s effect on jobs, this much is clear: the Affordable Care Act will over time mean fewer hours worked in the U.S. economy, which in turn will lower economic growth. That’s what Doug Elmendorf told members of the House Budget Committee at a Wednesday hearing.Both parties have been furiously spinning the news that the nonpartisan CBO believes the Affordable Care Act will reduce work by the equivalent of 2.3 million full-time workers. Republicans used the news to reignite the debate about whether the ACA is a “job-killer.” Meanwhile, Democrats defended the policy as solving the problem of “job-lock,” allowing people to leave jobs they only have for the sake of getting insurance. House Minority Leader Nancy Pelosi, D-Calif., made it sound downright magical, allowing people to “follow their passion.”
What the truth might be, and what few politicians would dare say, is there might simply be some value in lower economic growth.“It’s going to be a case that we’re going to solve an inefficiency in the system and allow people that might not want to work to go ahead and leave the labor force and have access to health insurance,” says Craig Garthwaite, assistant professor of management and strategy at Northwestern University’s Kellogg School of Management, who has studied job-lock and health insurance.
Allowing a 64-year-old manufacturing worker to retire a little early might not be such a bad thing, he says. Inspiring a mass of workers to leave the labor force, thereby reducing the tax base, however, could be more problematic.
“We have to figure out what’s the balance of that we’re willing to accept,” says Garthwaite.
Initially, says one expert, there will be benefits in the fact that there is plenty of slack in the labor market. The combination of many unemployed Americans and many people finding jobs just to get insurance means that if a few people cut back their hours, there will be more hours for the people who want them. In and of itself, that theoretically means people will be much happier, says Ken Jacobs, chair of the Labor Center at the University of California-Berkeley, though that effect would dissipate as the job market improves.
“GDP growth isn't a good in and of itself,” he says. “The question here is what's going to create the most happiness for the greatest numbers of people. Being in a situation where people have to work full time or 40 hours a week at a job that may not be the best match for them because that is the only way to get health insurance is not the way you create the greatest happiness for the greatest number of people.”Especially after years of obsessing over a sluggish economy, it might seem frivolous to consider balancing GDP growth against how happy Americans are. But it does prompt a thought experiment: Assuming for a moment that the Affordable Care Act produced precisely zero economic growth, either positive or negative, the question then is whether that boost in Americans’ contentment with their lives is worth it. And if the answer is yes, then the question is, what is the price of that happiness?
[ECONOMIC INTELLIGENCE: Obamacare Hasn't Caused a Shift to Part-Time Work Yet]
Some fear this shift will create a nation of loafers. When Elmendorf told Congress members on Wednesday that lower-income workers would be ‘better off’ with health care subsidies, but also more likely to give up hours under the ACA, Budget Committee Chairman Paul Ryan, R-Wis., responded with alarm.
“I understand ‘better off’ in the context of health care, but ‘better off’ in inducing a person not to work who is on the low-income scale not to get on the ladder of life -- to begin working, getting the dignity of work, getting more opportunities, rising their income, joining the middle class -- this means fewer people will do that,” Ryan said. “That's why I'm troubled by this."Then again, plenty of Americans have an incentive to work beyond insurance -- ask the low-income worker with $20,000 in student loans or the cashier who has to buy groceries for his kids if they have less of an incentive to work because they can get health insurance now.
The cumulative effects of an efficient labor market, “better-off” workers, and more gross domestic happiness would have to be weighed against whatever economic costs there might be, and those costs are unclear. The ultimate question is a question of philosophy of government: especially at a time of economic weakness, can any more hits to growth be tolerated, or is the populace’s welfare the ultimate good? None of which is, of course, easy to answer, so at the very least, political spin doctors can expect plenty more hours of work, regardless of what happens in the rest of the economy.