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Will Obamacare Turn Out to Be a Gigantic Job Killer?

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Few laws have been as polarizing as the Patient Protection and Affordable Care Act, which you probably know better by its shorthand as Obamacare.

Aside from the politics surrounding the law, a number of factors have contributed to its controversial status, including the individual mandate, which requires U.S. citizens to purchase health insurance or face a penalty of the greater of $95 or 1% of their annual income in 2014; the botched rollout of the state and federally run health exchanges, which have led to delayed enrollment for millions; and the fact that approximately 6 million people lost their health insurance policies because of the beefed-up minimum health benefits requirements attached to the PPACA.

Controversy is a two-way street, though, as Obamacare has also allowed 6.3 million people to become eligible for Medicaid or CHIP coverage and driven health insurance premium costs lower than initial estimates from the Congressional Budget Office.

The greatest Obamacare controversy of them all
Perhaps the biggest controversy of all surrounding Obamacare is whether it will be a gigantic job killer.

Before the opening of Obamacare's health exchanges, and even before the Obama administration announced a one-year delay of the implementation of the employer mandate to Jan. 1, 2015, we witnessed a push by a number of large employers to reduce workers' hours below the 30-hour threshold, which is defined as full-time by the laws of the PPACA.

Regal Entertainment (NYSE: RGC  ) , for example, cut hours for thousands of non-management employees last year and cited Obamacare as the direct reason it made the move. A Midwestern Wendy's (NASDAQ: WEN  ) franchisee did something similar by trimming some 300 of the chain's non-management employees to part-time to avoid any chance of being held accountable by the employer mandate.

These corporate moves have left the opposition to Obamacare wondering exactly how many jobs might be lost through its passing. This past week, these Obamacare pessimists got even more fuel for their fire when the Congressional Budget Office came out with its latest Budget and Economic Outlook Report (link opens a PDF; page 127 for those interested) for the next decade, which highlighted expectations that a decrease in worker hours would translate into the equivalent of 2.5 million jobs lost by 2024 directly because of the Affordable Care Act. 

Will Obamacare prove to be a job destroyer?
So you're probably wondering what the real story is with Obamacare -- in essence, will it cost the U.S. jobs or won't it? Ultimately, I believe both proponents and opponents of the law can be right in that select jobs will be lost, but specialized and higher-quality jobs will only be further enhanced by the law.

Opponents of Obamacare would point to the fact that Obamacare job losses are in direct relation to corporations that are scaling back hiring to part-time status, or simply holding off on hiring altogether to avoid the higher costs associated with potentially subsidizing their full-time employees.

The CBO's report would contradict that assertion and would point to a conscientious choice being made by employees to reduce their own work hours per week to earn less and boost their potential subsidy from the government. If you recall, citizens are eligible for some form of subsidy to up to 400% of the federal poverty level, allowing a number of people some degree of assistance when it comes to paying their health insurance premiums. The CBOs contention might seem counterintuitive to the historical modus operandi of the American worker, but considering commentary by Aetna (NYSE: AET  ) CEO Mark Bertolini a few weeks back that only 11% of new Obamacare enrollees were previously uninsured, it would point to citizens who are making any moves necessary to save a buck, including jumping ship from a corporate plan to Obamacare if it means bigger subsidies.

However, I believe the CBO's report leaves out a few other crucial aspects of the future jobs picture that are, and aren't, related to Obamacare.

Source: Ron Mahon, PicasaWeb.

Primarily, I believe the CBO's prognostications ignore the fact that the PPACA's health-care expansion is going to create an incredible demand in specialized health-care services. Just last week I examined the 10 fastest-growing jobs in America over the next decade, and seven were in the health-care field. These aren't jobs you simply walk into -- these are specialized and skilled positions that are in high demand and can require years of schooling. In other words, whereas select jobs are declining, skilled and specialized job types are only going to increase because of the Affordable Care Act, which could mean higher pay and better job security.

In addition, I think the CBO's estimates neglect to factor in what role technology is playing in reducing full-time jobs in the United States. The reliance on cloud computing and mechanized production lines are reducing workers' hours in a far greater numbers than Obamacare alone. As businesses look to cut costs, they will continue to invest in technology to replace lower-skilled workers, providing the true harm to the long-term jobs outlook.

Everything is based on perception
Ultimately, Obamacare's fate as a job producer or destroyer just depends on how you view the big picture. In the grand scheme of things, perhaps Obamacare is speeding up the process by which workers' hours are being involuntarily or voluntarily reduced. Then again, technological advancements have been making their presence known for the better part of two decades and have only increased the need for skill specialization on a shrinking workforce. I'll let you decide for yourself in the comments section below.

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Read/Post Comments (13) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 08, 2014, at 1:43 PM, davehb34 wrote:

    I love the way these guys try to segue into their sales pitch... Good article though. Oh Linkedin is the company he is talking about. It grew revenues 47% last qtr compared to the prior year, not sure if that still exceeds the other 3 combined, but given google and apple aren't growing all that fast, it wouldn't be surprising. He did actually recommend buying it when it was around $120, so you would have done quite well to follow his advice. At least so far.

  • Report this Comment On February 08, 2014, at 4:02 PM, AmericanPrivacy wrote:

    @Sean Williams Thank you for your well written article as I needed a good laugh. There is NOTHING affordable about the "Affordable Care Act" or Obamacare. The facts are this: Americans were sold a bill of goods..translation We were lied to plain and simple. Employers are cutting jobs and hours already and they still have the "exemption" Millions have lost their healthcare altogether. And all we hear from the media is how this is going to be a good thing. Save your "Spin" for spinning class.

    You remind me of what some of the crew of the Titanic must have been saying as it was going down.

  • Report this Comment On February 08, 2014, at 4:46 PM, gulfcoastrebel wrote:

    When did Motley Fool first show signs of being a conspiracy-crazed, anti-everything-Obama, Tea Party-controlled website, masquerading itself as a financial website?

  • Report this Comment On February 08, 2014, at 5:00 PM, etsosie wrote:

    IT already is a job killer by design... idiots!

  • Report this Comment On February 08, 2014, at 6:27 PM, stteresaofavila wrote:

    ARE YOU SERIOUS??? Look, I make above minimum wage and I work 40 hours a week and my take home after taxes is $250 a week. My employer is going to slash my hours in half as soon as Obamacare is implimented. I will have to get another job. Ok do you honestly think on $250 a week I will volunteer to get fewer hours to get subsidies. I don't make enough money to even feed myself as it is. I make above minimum wage, work full time, and I get $8 a month in food stamps. I'm still under the poverty level!!! The whole obamacare is bs.

  • Report this Comment On February 08, 2014, at 6:59 PM, braunfels wrote:

    I sure wouldn't take any advice from a republican propaganda site like Motley Fool. You're bias belongs in the same camp as Drudge or Rush Limbaugh.

  • Report this Comment On February 09, 2014, at 2:00 AM, dory wrote:

    It is not good that people will be working less and then having to depend on the government for assistance. The democrats are acting like piped pipers to draw the minion completely under their control. If everyone cuts their hours and only works part time they will be on Medicaid, which in turn means when they die the government will own ALL their belongings. Because they don't have enough money coming in they will now need food stamps. Will that mean that the government will just keep all the money and completely support everyone. Will we all be put in certain communities with like people and depending on our statis be raised to be a star or athlete, be skilled trades, a scientist, or a fast food employee. Man, this is getting scarey! We cant subsidize everyone. The middle class is disappearing and there will only be The Rich and the poor. All the politicians fall into that RICH category and they will have ALL the power.

  • Report this Comment On February 09, 2014, at 6:23 AM, kwolek21 wrote:

    What I'm hearing is at my age (53), I should go back to college, get another degree and start all over to accommodate the lost income to fewer hours? And I should be happy we have that many many many more eligible for medicaid? Who is footing the bill for this disaster? Me, middle class Americans who are already trying to make ends meet! Thanks Obama for bankrupting America!

  • Report this Comment On February 09, 2014, at 7:27 AM, sagegray wrote:

    The 2.8 TRILLION Dollar Health Care Organized Crime Syndicate does NOT want any CHANGE to the VERY LUCRATIVE cash flow......Obama Care is a POOR compromise to our nation's most serious economic problem....Your employer should NOT be involved in your health care anyway (or the INSURANCE SCAM)....YOUR Good health is a function of YOUR PARTICIPATION (and some "Good Genes").......We had better figure it out SOON....

  • Report this Comment On February 09, 2014, at 9:21 AM, cat2009 wrote:

    What do they mean turn out to be a job killer it already is. So far Obamacare has cost people jobs and haven't seen where it has created any. The only thing it has created is $60 million in cost plus the cost of another company finishing the job I guess in that respect it did create some jobs.

  • Report this Comment On February 09, 2014, at 9:33 AM, mumsie wrote:

    Many employers now keep employees under 30 hours a week to avoid paying benefits. It's not Obama care that is creating the problem it is the employer's greed finding ways to duck paying a fair share of the profits to the people who made those profits. The trend in this country for quite a while is to use the worker to make the wealth without giving the worker their fair share. No man would be wealthy without a lot of people doing the work that made him wealthy. These articles are aimed at the terminally stupid who buy this garbage instead of blaming the real culprits.

  • Report this Comment On February 09, 2014, at 10:18 AM, NRob22 wrote:

    Nothing screams "Guaranteed Vote" like free stuff. Unfortunately 80% of taxpaying Americans will pay for the portion not paying a dime in either taxes or insurance premiums. I guess what’s interesting here is the way the administration tries to disguise its true intentions with speeches on helping the middle class and small business. I think we all should know better by now.

  • Report this Comment On February 09, 2014, at 9:34 PM, PaulSell wrote:

    When asked about the projected job loss by the CBO, Barry smiled and said, "I just love that Yahoo picture of me with the Great Seal behind my pointy head, that looks like a halo on me. In addition I just want you to know, "I have a Bic Pen and an Obamaphone."

    Actually the Republicans are now just waiting for Barry & Company to work the kinks out of his legacy legislation OB☭M☭C☭RE ●! After all this isn't Dear Leader's just shuck and jive stuff, this is about millions of peoples lives. When OB☭M☭C☭RE ● smoothes out with the millions of lives it has disrupted, the Republicans promised to get right on immigration. Barry was quoted as saying," When I go out and say the, "You like it you can keep it 's...for years and still as recently as the SOTU, constantly fudge my numbers and get 4 Pnocchios from the Washington Post the next day, I JUST CAN NOT UNDERSTAND WHY "YOU PEOPLE" STILL DON'T BELIEVE MY SHUCK & JIVE ANYMORE? I know you're all struggling and I want you to just think back about Christmas. It cost you taxpayers $800,000 to bring my main squeeze "Snuff Lip" back from her extended stay in Hawaii. Now, for the millennials: Welcome to YOUR OB☭M☭C☭RE ●! The Liberals that now have to survive re-election with that albatross hanging around their socialist necks, STILL have to convince you soft headed millennials into another suicide vote for them again. Maybe we, Barry & Company, can chat up Pot Legalization, minimum wage increase, and Income Inequality, while still avoiding your chances at even getting a job, we Dems are just going to encourage you into believing that the lying Dems are actually going to make your lives so much better."

    OB☭M☭C☭RE ● NOW has DEATH SPIRAL written all over it. I do hope the Republicans are meeting with Insurance Companies, as I write, figuring out how to defuse this Economic time bomb with their new plan, when they regain the Senate in 2014.

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Sean Williams

A Fool since 2010, and a graduate from UC San Diego with a B.A. in Economics, Sean specializes in the healthcare sector and in investment planning topics. You'll usually find him writing about Obamacare, marijuana, developing drugs, diagnostics, and medical devices, Social Security, taxes, or any number of other macroeconomic issues.

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