One-in-Five New York Manufacturers Have Cut Jobs Because of Obamacare

Aug 22, 2016 - U.S. Chamber of Commerce

More than six years have passed since President Barack Obama’s Affordable Care Act (ACA) became law, and we continue to see its harmful effects on the economy.

Health care spending continues to grow faster than inflation, but even worse, people are losing their jobs.

The Federal Reserve Bank of New York survey of New York state businesses found that a significant number are cutting their staffs because of the health care law.

Source: Federal Reserve Bank of New York.

One-fifth (21%) of manufacturers and 17% of service firms said they reduced the number of employees because of the ACA’s effects.

Mandates on employers—like those found in the ACA--impose a “tax” on hiring, raising the price of a worker. The laws of supply and demand tell us that when the price of something rises, demand for it falls. Unfortunately in this case it isn’t steel, coal, or milk, but workers.

Those workers who didn’t see their jobs vanish might have still been hurt. Twenty-four percent of manufacturers and eighteen percent of service firms said they cut wages and benefits because of the ACA.

On the positive side, companies are doing their best to deal with the law. Most companies said they “were leaving unchanged the range of services covered and the size and breadth of the health care network.” However, those that were making changes to their health plans did so by increasing deductibles, co-pays, and higher out-of-pocket maximums for their workers.

These adjustments are in response to higher health costs. The survey found the median cost health care costs increase for New York businesses in 2016 was 8.5%, and the median expected cost increase for 2017 was 10%.

This data reminds us that the ACA did not come close to “fixing” what’s ailing our health care system. We need to continue to support commonsense reform efforts reduce costs, advance quality, and improve health.