The myth that Obamacare killed millions of jobs

As Senate Republicans debate the future of the Affordable Care Act, some Republicans are making wildly inaccurate claims about its impact on American jobs.

On Tuesday, Sen. Ted Cruz of Texas said the ACA was killing "literally millions" of jobs. Wednesday morning, Rand Paul of Kentucky said there were "800,000 fewer jobs because of Obamacare." There is no available research to back up Cruz's claim, and Paul seems to be relying on distorted economic research by the conservative Manhattan Institute.

The study that Paul seems to be citing, written by Casey Mulligan, an economist at the University of Chicago, does not say that Obamacare has killed 800,000 jobs (though it does strongly imply that).

Mulligan merely points out that economic growth and job growth slowed down after the Affordable Care Act went into effect in 2014. While that's true, that doesn't mean that it happened because of Obamacare — correlation, as economists say, does not equal causation. There could be a number of reasons for that slowdown, and many economists believe it has more to do with sluggish productivity growth and fewer jobs for mid-skilled workers.

Mulligan's research provides no concrete evidence linking the growth decline to Obamacare, but that didn't stop him from jumping to a conclusion. "Based solely on recent economic growth,” he writes, “the ACA has subtracted $250 billion from GDP." In a more recent article, based entirely on survey data from businesses, Mulligan pegs the jobs decline from Obamacare to at least 250,000 jobs.

Mulligan also argues that giving people the option to buy affordable health insurance that isn't tied to a job gives people less incentive to work. While there is some research to support that claim, his Manhattan Institute study doesn't find any direct evidence that it happened under Obamacare.

Economists at Stanford recently studied this issue, and their conclusions are more nuanced. In a working paper they published Monday, economists Mark Duggan, Emilie Jackson and Gopi Shah Goda concluded that, overall, the Affordable Care Act did not significantly affect the labor market.

"Our findings indicate that the average labor supply effects of the ACA were close to zero," they wrote.

The Stanford team took a much more detailed and comprehensive look than Mulligan did, analyzing Census Bureau data for more than 1 million households before and after Obamacare went into effect. They analyzed how many people left — or joined — the workforce in different income groups in states that did, and didn't, expand Medicaid coverage to low-income Americans.

They found that areas with a larger share of uninsured, poor families saw an increase in labor force participation after the law was passed. They believe this could have happened for two reasons. One, in states that expanded Medicaid, people who were newly eligible for Medicaid may have preferred to buy a private plan on the exchanges. If they worked more and earned more money, they could be eligible for federal subsidies to buy private health insurance. Second, in states that didn't expand Medicaid, poor Americans may have decided to work so they could make enough money to get federal subsidies to buy coverage. (Those subsidies are not available to people who live below the federal poverty level.)

The research didn't show much of a difference in labor force participation between states that expanded Medicaid and those that didn't.

Stanford University

On the other hand, labor force participation decreased in areas that had a larger share of middle-income, uninsured Americans before Obamacare. This is the group that qualified for federal subsidies to buy private insurance on the state exchanges (generally a two-person household earning an income of up to $64,000). Researchers think this may have given married couples an incentive for one spouse to quit working and qualify for the subsidy.

So while Obamacare may have created an incentive for one group of people to work less, economists believe that the impact was "modest." It hardly led to 800,000 fewer jobs, as Paul claimed. And the Stanford economists believe that any negative effect was canceled out by increased labor demand in areas where a large number of poor people became eligible for Medicaid, which led to more hiring in the health care industry.

As I've written before, hiring in the health care sector has been fueling job growth in recent years, largely because of the Affordable Care Act. If anything, Republican efforts to repeal and replace Obamacare are more likely to kill jobs. Based on new research from public health experts at George Washington University, that could leave nearly a million health care workers without jobs.

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