How Obamacare Prevents Job Growth — Real Health Care Reform Healthshare

How Obamacare Prevents Job Growth


The jobs report that came out today showed that only 69,000 new jobs were created in May.  (Of those, 5 were created by HSA for America.)  But more importantly, this was a dismal gain in overall employment, resulting in a rise in the official unemployment rate to 8.2 percent.  One of the underlying reasons for high unemployment is the economic burden caused by the health care reform law known as Obamacare.



Under this law there is a $2000 tax per worker for employers with over 50 employees, who do not provide approved health insurance coverage starting in 2014.  They get an exemption on the tax for the first 30 workers, but not on the next 20.  So a company with 49 employees that is considering hiring one more full time worker, could face a $40,000 tax for doing so.  There is no penalty for not providing coverage to part-time workers.


If the employer does offer insurance, but the premiums exceed 9.5 percent of the employees income, the employer faces a penalty of $3000 per worker who gets coverage through the exchange.  That’s a $3000 government incentive not to hire that worker.


Of course, employers who do provide insurance coverage are also facing rising costs.  Obamacare mandated many coverage benefits that have increased costs, and will further increase costs starting in 2014.  Already in effect are mandatory preventive benefits, mandatory maternity coverage, price controls which raise costs on younger people, and more.  Changes that take effect in 2014 will further increase costs, leaving employers facing higher expenses for every person they employ.


Many larger companies have calculated the costs of complying with Obamacare, and the results are staggering.  John Deere and Caterpillar, two Illinois-based heavy equipment manufacturers, have each stated that that complying with the law will cost these companies over $100 million each.


Businesses hire employees when they expect the income generated by that employee to exceed the cost of hiring the worker.  When the cost of hiring goes up, the number of hires goes down.



3 thoughts on “How Obamacare Prevents Job Growth”

  1. Kris says:

    I suspect there will be a shift for more part time workers than ever before. After all hiring two part-timers is much cheaper (in many ways) than hiring one full timer

  2. Jim McFadden says:

    Excellent comment Kris, and we are already starting to see this happen.

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