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.
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.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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