Obamacare Could Cause People to Stop Working, Say Economists


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Major portions of the Patient Protection and Affordable Care Act, colloquially known as "Obamacare," are set to go into effect starting next year. The effects of the legislation will be felt throughout the U.S. healthcare industry for years to come, but economists this week are pointing out one consequence that may show up almost immediately.

Economists from Northwest University, the University of Chicago, and Columbia University, in cooperation with the National Bureau of Economic Research, this week released an analysis of how Obamacare could influence employment in the U.S. They predicts that between 500,000 and 900,000 American could retire early or simply stop working due to the changes brought about by the legislation.

The estimate is based on a similar, though opposite situation that happened in Tennessee last decade. The state had expanded TennCare, its Medication health insurance program in 1994, covering many uninsured adults in Tennessee. When the expansion was ended in 2005 due to budget cuts, the state saw nearly half of the 170,000 people who lost coverage begin working. The economists believe the opposite could happen next year across the U.S., as adults slightly above the federal poverty line that are likely receive coverage under Obamacare are a similar demographic to those that lost coverage in Tennessee.

"This shows that there are many people out there who look for work simply because they need health insurance," said Tal Gross, a co-author of the paper and a professor at Columbia's Mailman School of Public Health. "For them, the perk matters more than the paycheck."

Gross and his colleagues term this situation "employment lock," and wrote that it shows the current market for health insurance is "flawed." The paper argues that Obamacare will not be a "job killer" across the U.S., but does give people an affordable alternative to working with only staying insured in mind.

"There is little doubt that the ACA will affect the employment picture," said Gross. "Historically, health insurance in the United States has been tightly linked to employment, and the ACA weakens that link."