Will Obamacare Really Kill 1.6 Million Jobs?

As Congress debates whether or not to repeal last year's health care reform law, one key point of contention is: Will Obamacare really kill jobs?

The Republicans certainly feel that it will, and they've put a number to the claim: 1.6 million jobs lost. They've sponsored a bill they call the Repealing the Job-Killing Health Care Law Act, which is likely to come up for a vote early next week. The bill will probably pass the House, where the Republicans have a majority, but will likely fail in the Democrat-controlled Senate. Even if it passed the Senate, though, President Obama would certainly veto the proposal.

The Republicans have based their claim that the law will kill 1.6 million jobs on an August 2010 report by the Congressional Budget Office, which said the Affordable Care Act would reduce the amount of labor in the economy by about 0.5%, because more people would choose to retire earlier, thanks to the reduced cost of health insurance.

But as an analysis by FactCheck.org points out, having people leave the job market because it has become financially possible for them to retire is entirely different from killing jobs. The FactCheck report says, in part: "The House Republican leadership. . . badly misrepresents what the Congressional Budget Office has said about the law. In fact, CBO is among those saying the effect 'will probably be small.'"

An Impediment to Hiring

The GOP's political leaders aren't the only ones who have issues with Obamacare. Another criticism has been made by the U.S. Chamber of Commerce, a private business-lobbying group. The chamber maintains that one provision -- that small businesses with more than 50 full-time employees must provide adequate health care coverage for their workers or face a penalty of between $2,000 to $3,000 per worker -- is causing many small firms to stop hiring.

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"We believe that because of the employer mandate, many of the small businesses that have 40 to 42 employees are not looking to expand their companies and not looking to hire additional individuals because if they get up to the 50 full-time employees level, they will then be required to pay the penalty," says Katie Mahoney, the chamber's director of health care regulation.

Supporters of the law disagree. Karen Davenport, director of health policies at the Center for American Progress, says she doesn't think the employer mandate will be such a problem for the economy. "For those businesses at the threshold, it probably is a very important issue," Davenport says. "But if you look at the big numbers, it is not going to drive the employment dynamics in the country."

Awaiting Details from the Regulators

Davenport notes that while there are more small businesses in the U.S. than large firms, the large firms have the most employees, and they already provide coverage to most of their workers. The center has published a study by Harvard economist David Cutler suggesting that if the health care reform law were repealed, heath insurance costs would resume their upward climb, costing the country an estimated 250,000 to 400,000 jobs a year.

Mahoney says in addition to the problem facing businesses with just under 50 employees, general confusion about how the law will be implemented has caused many companies to postpone hiring decisions as they wait to see how the thousands of regulations still being written by different agencies will affect them.

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"I would say that the uncertainty businesses are facing in complying with the new requirements is leading to a limited expansion because it's not clear what the new requirements are going to be," Mahoney says. "Regulations are being promulgated every day, and they are interpreting the statutory language in ways that many would say are unexpected."

In some cases, Mahoney asserts that regulators such as the Department of Labor have gone beyond what's in the Affordable Care Act and adopted language in their regulations that was present in draft versions of the bill, but eliminated from the final legislation. Uncertainty is never a condition conducive to business planning, so the true impact of health care insurance reform will likely remain unknown at least until the law's provisions are written into regulations.