Explosive Report: How Obamacare Will Drive People Out of the Workforce

by Amy Payne, Heritage Foundation, February 5, 2014

The White House took up defensive measures yesterday after the nonpartisan Congressional Budget Office released a new estimate: Obamacare will cause the equivalent of 2.3 million people to stop working.

“Double ouch,” said The Washington Post’s Chris Cillizza, outlining exactly what bad news this is for Members of Congress who voted for Obamacare.

Why will people stop working or reduce their work hours? One word: Money.

Under Obamacare, the less money you make, the more money taxpayers give you for health insurance. So when it comes time to consider a promotion or a different job, people will consider whether that move would make them lose their Obamacare subsidies.

Heritage expert Drew Gonshorowski laid this out last year: “Obamacare ultimately discourages low-income individuals from trying to move into higher paying jobs.”

Gonshorowski notes that Obamacare has all kinds of incentives for individuals:

Some of these distortions include incentives to reduce hours, not seek work, drop insurance coverage, drop dependent coverage, become divorced, or avoid marriage.

Even those who make more money are discouraged from working because of Obamacare’s tax increases. Those tax increases will eat away at their earnings, which could cause some people to avoid raising their income.

These are not good incentives. But the White House, Senate Majority Leader Harry Reid (D-NV), and others on the left are arguing that this is good news: People previously were locked in jobs simply to get health insurance, they argue, but now they can leave those jobs and have their health insurance subsidized by the taxpayers.

“This is people having new choices,” said Jason Furman, Chairman of the White House Council of Economic Advisors.

While workers have these exciting new “choices,” Obamacare has brought their employers lots of “choices,” too.

Businesses have been reporting to the Federal Reserve for some time now that they are hesitant to hire because of Obamacare and health care cost concerns. Heritage’s James Sherk and Jacob Deveney reported just yesterday that “Employers are responding to the uncertainty of the Obamacare rollout by slashing hours and limiting their new hires.”

The bottom line? “Giving people free benefits reduces their inclination to work to earn those benefits,” Sherk says. “Obamacare does not just reduce businesses’ willingness to hire; it also reduces Americans’ willingness to work. That is not cause for celebration.”

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