11 Jan 2016

Economists thought Obamacare would kill full-time jobs. That's not happening.

In mid-2014, it was not hard to find a story about a company cutting workers' hours in order to dodge Obamacare's insurance mandate. Target, Home Depot, and Walmart all ended up in the headlines for trying to dodge the employer mandate by having employees work fewer than 30 hours a week. 
Those were real stories, and they affected real people with real jobs. But new research in the journal Health Affairs suggests they weren't the norm: The data shows no national trend toward more part-time employment under the Affordable Care Act — even if you drill into the type of people you'd expect to get hit hardest.

How Obamacare could kill jobs 

There are two major ways the Affordable Care Act could, in theory, lead to people working less.
The first is the employer mandate, which requires large companies to offer insurance to any employee who works 30 or more hours a week. Health insurance is expensive, and if companies didn't want to buy it they could theoretically reduce workers' hours to fall just below the threshold.
"There is a clear economic incentive to cause employers to change," says Kosali Simon, a health economist at the University of Indiana. "If you were working 31 hours, are getting a certain wage, and now I'm being told I have to spend $5,000 on insurance, it's not like I have that money sitting around somewhere."
Obamacare also changed incentives for workers by making insurance more accessible outside of their jobs. For decades, Americans could only get guaranteed access to insurance through their employer. Those shopping for insurance on their own might not be able to afford it or could get rejected by the health plan for a preexisting condition.
Obamacare changed that: It made insurance available to everyone, regardless of income or health status. That seemed to set up a scenario where people who only worked to keep their insurance might work less.
The new Health Affairs paper tries to test both of these ideas — and finds that in both cases, there isn't evidence of workers and companies acting in the way economists might expect.

Part-time employment isn't increasing

Simon and fellow economists Asako Moriya and Thomas Selden looked at how part-time employment in the United States has fared in the wake of Obamacare.
Their paper starts by looking at the entire economy and doesn't show any uptick in part-time work since the law took effect:
(Health Affairs)
But it also tries to dive a bit deeper and look not just at the overall economy but at very specific subgroups that seem more likely to be affected. This includes people who work just above 30 hours per week and don't get insurance at work, who might see their hours cut to dodge the employer mandate. Or workers who gained Medicaid coverage — and might be less inclined to keep their job now that they have an alternative source of health insurance.
But Simon says that neither of those groups showed a clear employment pattern. Take the group that worked just above 30 hours per week and didn't have insurance in 2013, right before Obamacare hit. Their hours went down a little bit in 2014, but bounced back in 2015 to 2013 levels.
"These are the people right on the margin, and we're not showing any clear trend," Simon says.
What about the people who gained access to Medicaid? The researchers couldn't find these people specifically, but they could look at people with lower education levels, which would be a good proxy for a lower income that would make them eligible for the public program.
Among those with less than a high school diploma, Simon and her colleagues did see a slight increase in the probability of working 25 to 29 hours per week (from 2.44 percent in 2013 to 3 percent in 2015). But those changes seemed to be in line with trends happening prior to the health care law and weren't an especially large change.

Economics predicted people would work less on Obamacare. Why doesn't the data show that?

In 2013 and 2014, there was a lot of economic sense to the predictions about Obamacare depressing employment. This wasn't just from the law's opponents; the nonpartisan Congressional Budget Office, for example, raised a stir when it estimated that the law would result in 2 million fewer workers.
There are a few possible explanations for why part-time work hasn't downsized. One is that it's just too soon to see an effect, and it will take time for companies to adjust to the new mandates. The reduced hours might happen as people leave jobs, for example, and the replacement position for someone working 30 hours might be a 25-hour job. 

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