Obamacare’s unintended consequences

Rob Portman Contributing Columnist

February 20, 2014

The more we learn about Obamacare, the worse it gets for the American people. We have become almost numb to the parade of bad news that has followed last year’s rollout of the President’s health care legislation — the failed website, the millions of Americans who lost their health insurance or their doctor, the millions more who’ve seen their premiums and deductibles go up, the businesses that aren’t hiring or are cutting hours because of the law’s provisions.

Take the small business owner who wrote to me about having to tell his 35 employees that their insurance would be cancelled and that the cheapest replacement policies would include a 35 percent increase in premiums as well as a 33 percent increase in deductibles. Or the father of five who saw the cost of his family’s insurance double under Obamacare. I’ve heard many similar stories repeated by moms and dads and small business owners across our state.

Now we have even more bad news: a new analysis from the non-partisan Congressional Budget Office (CBO) says Obamacare will result in the equivalent of 2.5 million Americans dropping out of the workforce over the next decade because there will be a disincentive to work.

Under Obamacare, workers who make up to 400 percent of the poverty line are eligible for government health care subsidies. These subsidies phase out sharply as people work harder, gain more responsibility, and move up the ladder. As the CBO reminds us, if government policy makes work less financially rewarding for people, there is likely to be less work.

Many Democrats in Washington are celebrating this report, claiming that it gives these Americans freedom from work to be able “to pursue their dreams,” as one White House spokesperson said. What it actually does is dissuade people from the best way to get out of poverty — working a job. From indications based on research about the current 35 year low in “labor participation,” the majority of those who will leave the workforce will be young, single, childless people in poverty who are just making their first efforts to climb the ladder of success.

The Democrats like to say that these workers are getting out of “job-lock.” My concern is that they are becoming mired in poverty-lock, their dreams of building a better life undermined by government penalties that make it easier and more cost-effective not to work. For them, the social safety net becomes a spider web, a trap that those Americans already in poverty will be unable to escape.

It’s a sad day when we measure success by how many people drop out of the workforce, rather than how many people are able to climb the ladder of success toward a good job. That’s not what America is about.

We want America to be a place where if you work hard and play by the rules you can get ahead. The sort of place where, as President Obama said in his State of the Union Address, “the son of a barkeep is speaker of the House, [and] the son of a single mom can be president…” That sort of opportunity society encourages work, not dependency.

The dignity and self-respect that comes from a job is a strong American ideal. Based on the CBO report, Obamacare’s poorly designed subsidy system with a sharp cliff if you work too much encourages even those who want to work not to do so. It essentially makes work a poor economic decision. It sets up a system where a job seems like it’s not worth the effort.

This effect could hardly come at a worse time. The Labor Participation Rate — the measure of how many Americans are actively employed or seeking work — is already at levels not seen since the 1970s. Too many workers are already discouraged. They already feel like they cannot get ahead in this economy.

In the face of these challenges, we need pro-growth policies that create opportunity and help the unemployed get back in a job, policies that help the poor become part of our vibrant middle class. Obamacare is the opposite of that. I’ve spoken with many small businesses that tell me they are holding back on hiring new employees because of the costs associated with the President’s health care law. We also know that Obamacare will result in the equivalent of a one percent pay cut for the American worker.

Democrats want to claim that Obamacare has no effect on job creation or, even more unbelievably, that it is a net positive. And yet, just this week, the President delayed the employer mandate in Obamacare for yet another year. It makes one wonder, if the policies contained in Obamacare are so beneficial to the American people and the economy, why has the Administration delayed or amended provision after provision of the law?

Whatever the good intentions were behind Obamacare when it was created, those intentions have been undermined by the reality of its implementation. Despite promises to the contrary, it is reducing jobs. It drives up cost. It takes away health care coverage people need for themselves and for their families. And now we know it undermines work, too. The need to repeal it and replace it with reforms that work to lower costs and expand coverage without killing jobs is now more urgent than ever.

Rob Portman is a United States Senator.