Will Obamacare cost jobs and slow the economy? This has become a critical question of the presidential campaign, with Governor Romney attacking the President’s signature health reform law as a job-killer. A new Urban Institute brief suggests that these claims will not pan out in reality.
The Affordable Care Act, coined Obamacare, was modeled closely after Governor Romney’s 2006 health reform in Massachusetts, which offers a valuable case study on the effects of this kind of legislation. As the chart below shows, prior to health reform, GDP for the rest of the nation was growing faster than GDP for Massachusetts. After reform, Massachusetts GDP growth far outpaced that of the country. While there are many possible reasons for the stronger growth in Massachusetts, there is no evidence that health reform slowed economic growth.
Further, there is no evidence that Massachusetts employers have cut back on hiring because of health reform. Changes in private-sector employment in Massachusetts closely mirrored those of the nation overall before and after health reform. Additionally, business leaders from across the state agree that health reform has been good for Massachusetts businesses.
After health reform, uninsurance rates in Massachusetts fell significantly and stayed low during and after the recession. Key to this fall in uninsurance rates was the expansion of employer-sponsored coverage, which rose from 70.1 percent in 2006 to 75.1 percent in 2008. Over the same period, the rest of the nation saw a continuing decline in employer-sponsored coverage.
While there are differences between Obamacare and Massachusetts health reform, Obamacare’s effect on jobs should not differ significantly from the situation in Massachusetts. Fully 74 percent of all U.S. firms are exempt from the Affordable Care Act’s requirements that employers sponsor coverage. Of the remainder, 96 percent already provide health coverage to their workers. With so few firms affected by the employer penalties, there’s no reason to expect reform to significantly slow job growth.