The Senate’s healthcare double whammy: fewer jobs and less care

This commentary was originally featured in The Hill on August 12, 2017. 

The House of Representatives passed the American Health Care Act. Though advertised as their repeal-and-replace bill, the AHCA amended and in some ways enhanced ObamaCare. In July, the Senate just said no to any action whatsoever on our failing healthcare system.

Congressional Republicans seem unable to envision a solution for healthcare that restores the proper relationship between doctors and patients where the payer is the patient. 

The Obama administration promised by expanding Medicaid Americans would be freed from job lock and able to work less. This is another example of Washington’s attempt to orchestrate people’s behavior and its refusal to admit the purpose of any healthcare system is to improve access to quality care. 

The freedom to work less is an incentive to stop working, as demonstrated by the 40-year low in the labor force participation. Explanations for this decline include retiring baby boomers and fewer young adults searching for jobs, partially due to rising state and local government-mandated minimum wages. However, that does not account for a 30-year low in the job participation rate for 25-54 year olds.

In a recent survey of businesses with fewer than 50 employees, economist Casey Mulligan found that ObamaCare contributed to killing at least 250,000 jobs. These losses, whether direct fires or fewer hires, are driven by ObamaCare’s mandate that small businesses must guarantee workers’ health insurance.

If people can’t find jobs, they either drop out of the labor force or apply for disability, which remains near record levels at 8.8 million Americans. 

Businesses’ higher cost from soaring insurance premiums for hiring that 50th worker explains more terminations and fewer new hires. But what is reducing current workers’ desire to work? Mulligan attributes this to the implicit marginal income tax.

This implicit tax is not explicit like income tax, whereby raising your income to where you lose free government insurance reduces your incentive to work and earn more. A Medicaid recipient who works extra hard and increases his income could be rewarded by losing thousands of dollars in welfare payments.

To pay the $2 trillion price tag for ObamaCare, additional taxes were levied on American workers. Many people decided to leave the workforce, collect benefits, and avoid paying income taxes. This promoted a vicious downward spiral with an ever-expanding Medicaid pool and an ever-shrinking taxpayer pool.

More ominous even than ObamaCare suppressing job growth, wage growth, and economic output, is the ACA’s effect on care. 

Healthcare discussions always seem to focus on the number of insured individuals with no proof that having insurance will lead to timely care. After paying the huge bureaucratic and administrative costs of ObamaCare, there is too little money remaining to pay for care. Already low doctor reimbursement schedules continue to fall. The hardest hit is the Medicaid population: only 53 percent of U.S. physicians accept new Medicaid patients.

The experience of New Mexico Medicaid proves that ObamaCare reduces access to care. With expansion, New Mexico Medicaid added more than 300,000 new enrollees, causing a shortfall of $417 million. To balance the state budget, they had to cut low doctor reimbursements even lower. The result is more insured people with fewer doctors to provide care.

Americans now experience the worst possible scenario. National spending is up, productivity is discouraged, and insurance premiums are more unaffordable. While more Americans have insurance, care is increasingly difficult to access. 

Washington, D.C., should return healthcare to long-excluded free market principles instead of continuing failed government controls like ObamaCare.

There is no better example of an effective policy choice than the Texas model of limited government. Ranking as nearly the most “economically free” state according to the Fraser Institute, Texas leads the nation in economic growth and job creation, where almost 30 percent of all U.S. jobs were created in the last decade in a state with only 9 percent of the population.

Unleashing major economic activity comes from a host of pro-growth policies. However, the key decision is to limit the size and scope of government. Healthcare is a policy area that desperately needs the same key: less government.  

Congress just threw away an opportunity to repeal oppressive ObamaCare. Eliminating its onerous mandates would have restored jobs, reduced bureaucratic waste in healthcare, and increased access to care. 

America needs a system that puts patients back in the driver seat so they can shop for their health care and make their own health decisions. Healthcare should not be a system that de-incentivizes work, discourages risk-taking and innovation, keeps people dependent on federal handouts, and lets Americans die waiting in line for care. It’s time for a market-based, patient-centered approach.