February 21 2014
ObamaCare Tax Leads to Job Cuts
Patrice J. Lee
The White House has been on the defense following two damaging reports that ObamaCare and raising the national minimum wage would result in the cumulative loss of millions of American jobs.
The President and surrogates try to spin or dispute the Congressional Budget Office’s findings, but Americans are already spooked. Earlier this week Health and Human Services Secretary Kathleen Sebelius said emphatically, “There is absolutely no evidence, and every economist will tell you this, that there is any job-loss related to the Affordable Care Act.”
She spoke too fast. Now, we have some early evidence from the medical technology industry that ObamaCare has caused job losses and more.
According to a healthcare trade association, 33,000 jobs have been lost in the industry because of the new ObamaCare tax on medical devices. The tax hits producers of medical devices such as MRIs, surgical instruments and pacemakers. In addition, these companies have deferred or cancelled capital investments, deferred or cancelled plans to open new facilities, reduced investment in start-up companies, and reduced or deferred increases in employee compensation.
The New York Post reports:
The Advanced Medical Technology Association surveyed its members to determine the number of lost jobs since the 2.3 percent excise tax on medical devices took effect in January 2013, raising about $3.8 billion a year to help pay for ObamaCare.
The survey found that nearly a third of respondents had cut research and development because of the tax, and almost 10 percent had moved manufacturing abroad.
The job losses were put at about 14,000, with another 19,000 openings that were left unfilled.
During a time when there is bipartisan support for growing high-technology manufacturing jobs, these results should serve as a wake-up call,” said Stephen J. Ubl, president of the Advanced Medical Technology Association.
To believe Kathleen Sebelius’s claim that ObamaCare will lead to no job losses is to stick your head in the sand.
As this study shows ObamaCare discourages job creation by raising the price of hiring. That’s not unique to medical device industry. It’s Economics 101. If you increase the price of labor, companies will buy less of it. Requiring employers to buy health insurance for some workers makes them more expensive, at least in the short run.
Beyond labor, ObamaCare impacts other processes that encourage business growth such as deferral or cancellations of capital investments, building improvements, and investments in other start-ups. This leads to stagnant companies.
We should be careful not to run too far in the other direction predicting doom and gloom. Our arguments will be rejected just like the President’s broken promises (i.e., keeping your healthcare plan, doctor, and medication).
As the un-Affordable Care Act takes full effect, we’re moving from theoretical implications to real world impacts. The harm to Americans and American workers far outweigh the help that they posit to be delivering, which is questionable. We don’t how many new ObamaCare enrollees were previously uninsured, but we do know how many had their plans cancelled and now we’re learning how many workers have lost their job.
Any legislation or government program that harms the job market is a program we should scrutinize and one the Administration ought to reconsider.