New report: No evidence that the Affordable Care Act is a ‘job killer’

One of the big criticisms that opponents of the Affordable Care Act love to trot out is its impact on the economy — one phrase you often hear is “job killer.” In fact, in 2011, Republicans in the House actually introduced legislation officially titled “Repealing the Job-Killing Health Care Law Act.” That bill didn’t make it far. However, a new report finds that “job-killing” isn’t just hyperbole; it’s just plain wrong.

Earlier this month, the Urban Institute released a new report on the ACA and employment, asking “Has the ACA been a job killer?” Authors Bowen Garrett and Robert Kaestner noted that the health reform law does contain several measures that could impact the labor market. For example, requiring employers with 50 or more full-time employees to provide health insurance or face penalties could have encouraged employers to reduce employee hours so that they were exempt from the insurance mandate. Another theory was that expanding Medicaid eligibility and offering income-based subsidies through the new health insurance marketplace would incentivize some workers to reduce their work hours or stop working altogether.

To find out whether such job-killing theories came to fruition, the researchers analyzed the effects of the ACA as of 2014, focusing on four outcomes: labor force participation, employment, part-time employment and the usual number of hours worked per week among workers. Their overall finding: The ACA had “virtually no adverse effect” on the labor market. The researchers write:

Full implementation (of the ACA) may have different effects on the labor market… But much of the ACA has been implemented, including all of its coverage provisions, and an estimated 14 to 15 million persons have gained insurance following the implementation of the new marketplaces and the Medicaid expansions. Any workers who were primarily working to obtain health benefits should have been the first to reduce their hours or drop out of the labor market in 2014. It is reasonable to argue that if the ACA were going to have a substantial adverse effect when fully implemented, then we should have seen some evidence of it already happening in 2014 because a substantial portion of the ACA was in effect. The results presented here show little if any early indication of the large labor market effects some have predicted, which casts doubt on whether these predictions will come to fruition in the coming years.

Using data from the Current Population Survey from January 2000 to December 2014, researchers found that among nonelderly adults with a high school education or less, employment in 2014 was 1.8 percentage points higher than what would have been expected based on unemployment and demographic trends. (Note: It’s this particular group of adults that some predicted would be most negatively impacted by the ACA, as lower-wage jobs don’t typically come with insurance benefits and so opponents predicted employers would look for ways to sidestep ACA mandates.) Among that same group of adults, part-time employment was 0.5 percentage points higher than what would have been expected — this finding aligns with predictions that employers would reduce worker hours to avoid requirements that they provide insurance (the ACA defines 30 hours a week as full time).

But in reference to the slight bump in part-time work, the authors noted that “the difference is sufficiently small, however, that we find no evidence of a change in the number of hours worked in 2014 and thus no overall change in labor supply beyond what would be expected.” In other words, they found that when it came to the usual hours worked per week, the actual and expected numbers for 2014 were just about identical. When it came to the Medicaid eligibility expansion for low-income adults, which only about half the states decided to take advantage of, the report again found “virtually no effect” on the labor market. In examining data on nonelderly adults with a high school education or less, researchers found that the expansion had no effect on labor force participation and no statistically significant effect on part-time employment.

“The results show that overall, there is nothing particularly unusual about labor market outcomes in 2014 that would suggest that the ACA has had much, if any, effect,” write Garrett and Kaestner. “Importantly, our analysis can identify relatively small effects, so it is not the case that there were potentially large effects that we could not detect.”

To download a full copy of “Recent Evidence on the ACA and Employment: Has the ACA Been a Job Killer?” visit the Urban Institute.

Kim Krisberg is a freelance public health writer living in Austin, Texas, and has been writing about public health for more than a decade.