Running Head: ECONOMIC IMPACT OF THE AFFORDABLE CARE ACT

Economic Impact of the Affordable Care Act

Joel I. Hernandez
The University of Texas at El Paso

ECONOMIC IMPACT OF THE AFFORDABLE CARE ACT

Abstract

The Affordable Care Act has created much controversy ever since it was inaugurated into
office on March 23, 2010 by president Barack Obama. Many arguments have been
established over the Affordable Care Act; however, this paper focuses on the arguments
that are related to economy. The impact the ACA has on our job market in the United States
has been debated from the start. Other arguments such as the impact of fining employers
and businesses that fail to offer employees health insurance will also be addressed.
Arguments like these and other similar arguments are significant to the standing of the law.
People only see the law through either side and fail to see the law as a whole and the laws
complete and full impact on our economy.

ECONOMIC IMPACT OF THE AFFORDABLE CARE ACT

The Affordable Care Act was signed into law on March 23, 2010 by president Barack
Obama; along with the Health care and Education Reconciliation Act. The Affordable Care
Act is the latest health care reform law in the United States. The purpose of the law is to
provide greater healthcare options with a higher availability to all Americans and in a more
affordable manner than before. The same Americans that saw the benefits of the ACA and
voted in favor are now unhappy with the impact of the law. Having both benefits and
disadvantages, the ACA has become a controversial issue that has yet to reach an effective
conclusion.
The most argued issue of the ACA is the loss of jobs that has occurred since the law
was passed. According to an article written by Feldman (2014), the ACA will be responsible
for the loss of 2.3 million full-time jobs by 2021. The ACA is not responsible for all of the
jobs that have been lost in the United States; however, it is possible that the ACA has caused
many Americans to become unemployed. The ACA provides the public with more freedom
to work fewer which then can lead to a lower participating workforce (CBO, 2014). The
ACA requires businesses that have a staff of at least 50 full-time employees to offer
insurance or pay a fine to the government for failing to do so. This will result in employers
attempting to avoid any fines by firing full-time employees and hiring more part-time
employees or, having full-time employees receive fewer hours to then be considered parttime employees. As author Senger (2013) states, This creates an incentive for businesses
to avoid both the penalty and cost of coverage by hiring part-time employees instead of
full-time employees, since businesses will not be penalized for failing to provide health
insurance to part-time employees.

ECONOMIC IMPACT OF THE AFFORDABLE CARE ACT

Employers will find that paying a fine to the government will result less expenses
than providing an inexperienced employee with health insurance (Sherk, Tyrrell, 2013).
Trumbull (2012) stated, Already, some businesses with low-wage workers have
announced plans to shift toward part-time staffing to stay under that 50-person cap. On
the contrary, the Congressional Budget Office argues that some employees will benefit from
having less working hours. An employee with a lower income can then become more likely
to be eligible for Medicaid (2014, p. 117). Furthermore, employers that seek a part-time
workforce will provide the public with a significant increase of available employment (CBO,
2014, p. 118). In addition, the Congressional Budget Office states:
The ACA significantly increases eligibility for Medicaid for residents of states that
choose to expand their programs. In states that adopt the expansion, Medicaid
eligibility is extended to most nonelderly residents whose income is below 138
percent of the FPL- including childless adults who previously were ineligible for
Medicaid in most states regardless of their income. (2014, p. 120)
Additionally, families who were eligible for Medicaid prior to the ACA will now be able to
work more and continue on to be eligible due to the provisions of the ACA (CBO, 2014,
p.121). With such a great increase of the population with Medicaid, people will be less
likely to get caught up with employers for insurance benefits. The Affordable Care Act
provides the public with affordable health insurance that can be obtained without
employers. However, Kathryn Nix argues, this reform will result in less choice and
competition for health care consumers and, although more Americans will be covered,
the quality of this coverage will decrease. (2010)

ECONOMIC IMPACT OF THE AFFORDABLE CARE ACT

On the contrary, by expanding coverage, the ACA will increase access to medical care that is
needed; greater access to care due to the ACA results in a reduced mortality rate, an
improvement in mental health, as well as an improvement in self-reported health status
(Furman, 2014). Moreover, residents who live healthier lives will miss fewer days of work,
are less likely to become disabled, will tend to spend more years as an employee, and will
be capable of higher productivity whilst on the job (Furman, 2104). Effectively, the
increased availability of health insurance has established additional economic benefits.
Jason Furman from The Council of Economic Advisors argues that:
Access to health insurance outside the workplace allows people to structure their
careers in ways that make sense for them, like by taking time off to raise a family or
by retiring when they want to. It also allows people to take risks that further their
careers and benefit the economy as a whole, like going part-time in order to go back
to school, leaving a job in order to start a business, or moving to a better job,
perhaps at an employer that does not offer coverage. (2014)
Increasing mobility for the workforce allows for a secure access to health insurance, which
helps employees to find a job that is best for them. As a result, overall wages and
productivity are increased; moreover, the reduction of job lock encourages
entrepreneurship. Entrepreneurship is important for the economy as it creates more jobs
(Furman, 2014). Additionally, Furman continues on by identifying that, more than 2
million people had selected a plan in the health insurance marketplace, and nearly 80
percent of those people will thanks to the ACA benefit from tax credits to help pay their
premiums. (2014) The ACA provides easiness in obtaining health care services for families
that have other important needs. In disagreement, Senger states:

ECONOMIC IMPACT OF THE AFFORDABLE CARE ACT

Obamacare saddles businesses with more burdens than benefits. Not only do
Obamacares policies fail to help small businesses in the way intended, but the
unintended consequences of its mandates and regulations are even worse. As
Obamacares full implementation nears, its increased costs and complexities are
likely to significantly hinder business growth and success. (2013)
The Affordable Care Act has established various controversial issues that need to be
addressed. With a public that is uniformed, the Affordable Care Act can be kept in office or
it can accidentally be removed form office. Americans must reach a conclusion on this issue
as it affects every resident directly. Our health care system has a significant role on our
economy and a big impact on our lives; the least the public can do is use it in the most
effective manner possible.

ECONOMIC IMPACT OF THE AFFORDABLE CARE ACT

References
Congressional Budget Office (2014, February). Labor market effects of the Affordable Care
Act: updated estimates. p. 117-127
Feldman, L. (2014, February 4). Obamacare to cost economy 2.3 million jobs? Not so fast.
Christian Science Monitor. p. N. PAG.
Furman J. (2014, February 6). Six economic benefits of the Affordable Care Act. Council of
Economic Advisors. Retrieved from: http://www.whitehouse.gov/blog/2014/02
/06/six-economic-benefits-affordable-care-act
Nix, K. (2010). Obamacare: impact on the uninsured. Retrieved from http://www.heritage.
org /Research/Reports/2010/04/ObamaCare-Impact-on-the-Uninsured
Senger, A. (2013, August 26). Obamacares impact on business: an update. Retrieved from
http://www.heritage.org/research/reports/2013/08/obamacare-s-impact-onbusinesses-an-update
Sherk, J., Tyrrell, P. (2013, November 22). Obamacare and a minimum wage hike pricing
many unskilled workers out of their jobs. Retrieved from http://www.heritage.org
/research/reports/2013/11/impact-of-obamacare-and-minimum-wage-hike-onworkers-and-jobs?ac=1
Trumbull, M. (2012, November 28). Obamacare countdown: how will reform affect the
economy? Christian Science Monitor. p. N. PAG.