Repealing Obamacare Will Improve California’s Job Market

Confident Doctors(A version of this Health Alert was published by the Orange County Register.)

Obamacare was a cash cow for providers, which now argue it was a program for jobs and economic growth. They now say that repealing Obamacare will kill California jobs. That grabs any politician’s attention, but it is not true.

According to a study by the UC Berkeley Labor Center, which is promoted by the California Hospital Association:

“The majority (135,000) of these lost jobs would be in the health care industry, including at hospitals, doctor offices, labs, outpatient and ambulatory care centers, nursing homes, dentist offices, other health care settings and insurers. But jobs would also be lost in other industries. Suppliers of the health care industry, such as food service, janitorial and accounting firms, would experience reduced demand, leading to job loss. The lost jobs also include those lost due to the ‘induced effect’ of health care workers spending less at restaurants, retail stores and other local businesses.”

Such research relies on the so-called “multiplier effect,” a politically seductive but misleading type of voodoo economics.

It goes like this: Obamacare throws money at hospitals, doctors’ offices and other health services. Those recipients build new facilities and hire more workers, who spend their paychecks in their communities.

Okay, but if Congress just sent a fleet of helicopters to scatter banknotes from the sky, the same “multiplier effect” would take place: People would pick the money up and spend it. Businesses located near the drop zones would profit, hire and expand. However, jobs and the economy would not grow because the effect would be a mix of inflation and reduced spending in areas away from the drop zones.

Worse, because this type of spending is politically motivated, it is usually demanded by industries which resist productivity improvements. Last July, Dr. Bob Kocher, a venture capitalist who served as a special assistant to President Obama when Obamacare was crafted, lamented that just over half of health services workers are administrators, up from just over one third before Obamacare.

Indeed, the evidence suggests Obamacare has had the perverse effect of driving too many workers into health services, depriving other, more productive sectors of labor.

During Obamacare’s “incubation” until December 2013 (before Covered California’s insurance policies became effective and Medi-Cal expanded), health services jobs increased by 2.5 percent annually while non-health jobs increased by 2.0 percent annually. From the start of Obamacare coverage through last December, health services jobs grew by 3.4 percent annually, while non-health jobs grew by 2.6 percent annually.

The change in composition of employment in California during this period, just short of a decade, is astonishing.

At the end of July 2007, health and social services employed 1,692,000 people and added 517,000 jobs by the end of last year, never having suffered a recession. Just 587,000 nonfarm civilian jobs outside health and social services jobs were added during that same period. Health and social services jobs grew over 30 percent while other jobs grew by less than 5 percent over 113 months! Although comprising just 11 percent of jobs in California in July 2007, health and social services accounted for almost half the job growth since then.

This is the result of a politically driven reallocation of resources toward health services spending that is still characterized by waste and inefficiency. Obamacare has proven a poor deal for patients. It is also a poor deal for jobs and economic growth in California. It has to stop before more workers’ valuable labor is consumed pushing paper in the government-health care complex.

Comments (7)

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  1. Lee Benham says:

    What the hell john! Dropping bank notes from helicopters would be conditioning the Liberals to stand in another place to receive the handout.

    Also why on earth tell them that repealing Obamacare would be a good thing for the economy. They are trying to secede for crying out loud. Let them Go!

  2. Lee Benham says:

    Looks like the Republican have been working

    1 – Pages 1-7 Intro, and eviscerating Obamacare. Pages 1-7

    Page 7 – Three methods of reaching the goal, which are Repeal/Replace legislation, Trump administration actions, and “Regular Order”.

    Page 8 – Four major segments of their plan, which are:
    * Medicaid – more details later, but in summary, they plan to give it back to the States

    * States Grants to control their own markets – more details later, but this summary said it includes high-risk pools, Cost-sharing reductions, etc.
    * Enhance HSAs – more details later
    * Portable Tax Credits – more details later

    Page 10 – Brief Summary of the Portable Tax Credits:
    * They are refundable (if you don’t owe taxes, you get the tax credit anyway, and if you are eligible for more tax credit than you received, you get it on your refund.)
    * They are advanceable (it offsets monthly premium, rather than requiring you to wait until tax filing time to receive it.)
    * Arguments to support that this was a GOP idea first, not an Obamacare invention! LOL

    * It’s for the IFP market, not those with Employer Sponsored coverage.
    * VERY IMPORTANT INDICATORS – “The Obamacare subsidy system did not work because the law required the subsidies only be used to purchase expensive, one-size fits all coverage. Further, the subsidies could only be used on the government exchanges.” This seems to indicate that the exchange is gone, hallelujah!
    * Relief from:
    The tax on health insurance premiums
    The medicine cabinet tax
    The tax on prescription drugs
    The tax on medical devices
    The increased expense threshold for deducting medical expenses
    * VERY IMPORTANT information about the transition between now & the time the new system is ready, “To provide relief during the transition period, the penalty taxes for the individual mandate and the employer mandate are zeroed-out immediately. Additionally, Americans eligible for the Obamacare subsidy will be able to use their credit for expanded options, including currently prohibited catastrophic plans. To promote market stability and premium stabilization during the transition period, the Obamacare subsidies are adjusted slightly to provide additional assistance for younger Americans and reduce the over-subsidization older Americans are receiving.”

    * VERY IMPORTANT – “Our proposal will then create a new, advanceable, refundable tax credit to assist with the purchase of health insurance on the individual insurance market. The legislation creates a new code section – 36C— to do this. The credit is Universal for all citizens or qualified aliens not offered other qualifying insurance, Age-rated, Available for dependent children up to age 26, Portable, Grows Over Time.” So, this appears that they are “repealing” by creating a new tax code, with new subsidies that swallows up the old subsidy regulations. I’m not sure, but that’s what I take away from this.

    * The credit is not based on income. This will help simplify the verifcation process and expand access for Americans who have been left behind by Obamacare. Additionally, a universal credit does not create the same labor market distortions and perverse incentives as President Obama’s law did: according to CBO, the Obamacare income-based subsidy system resulted in so many lost labor hours it would be as if 2 million full-time equivalent workers left the labor force in 2025. A universal credit fixes this unnecessary disincentive to work and makes sure our tax code is built for growth.

    * Older Americans will receive a higher credit amount than younger Americans, reflecting the higher cost of insurance for older Americans. Taxpayers can receive credits for their dependents including children up to the age of 26. The credit, however, is limited only to citizens or qualified aliens. Incarcerated individuals are not eligible for the credit.

    * For IFP market – not for those eligible for Employer or Govt sponsored insurance.

    * Is for any eligible plan approved in your state and sold in the IFP market, including Catastrophic plans. Can be used for COBRA premiums.

    * VERY IMPORTANT – Unused tax credit can be put into an HSA.

    * Portable – but they don’t explain this much at this point.

    Pages 13-14 – History of HSAs

    Page 14 – HSA reform:
    * Increase contribution to match the max out-of-pocket allowed by law (in 2017 that is $6550 individual and $13,100 family.

    * spousal catch-up contribution flexibility

    * 60 day window to open your HSA account and retro fund your expenses for those 60 days.

    Page 15 – Medicaid reform.
    * Under our proposal, Obamacare’s Medicaid expansion for able-bodied adults enrollees would be repealed in its current form. There would be a period of stability to ensure we are not pulling the rug out from underneath States or patients. States that chose to expand their Medicaid programs under Obamacare could continue to receive enhanced federal payments for currently enrolled beneficiaries for a limited period of time. However, after a date certain, if states choose to keep their Medicaid programs open to new enrollees in the expansion population, states would be reimbursed at their traditional match rates for these beneficiaries.”

    * Block grants based on “per capita”.

    Page 16 – VERY IMPORTANT – State Innovation grants. “Here is how it works. These funds will help repair state markets damaged by Obamacare. States can use the pool to cut out-of-pocket costs, like premiums and deductibles. States may also use these resources to promote access to preventive services, like getting an annual checkup, as well as dental and vision care. And if they choose, states could funnel the money through a now-dormant high risk pool to achieve the same goals of the dated program.Among other purposes, states could use these creative State Innovation Grants to:
    * Reduce patients’ out-of-pocket costs, like copayments, coinsurance, premiums, and deductibles
    * Lower the cost of providing care to high utilization patients
    * Stabilize the individual and small group markets
    * Access preventative services, like an annual checkup
    * Promote participation in private health care plans”

    • Ron Greiner says:

      I don’t trust these RINO Republicans.

      * It’s for the IFP market, not those with Employer Sponsored coverage.

      Worded exactly that way is fine because this says those WITHOUT employer-based insurance can get Republican tax credits. BUT, if this switches to “access” to employer-based coverage that will keep the employer-based plans afloat a little longer, like the pumps on the Titanic, and we don’t want to do that.

      This reminds me of that scene in the movie Titanic where everybody is still dancing singing and the engineer is telling the Captain this ship is doomed. Only took him bout 20 mins after the impact to declare that the ship will 100% sink. Sell your United Health Care Stock before the nosedive. You read it here 1st! (57 seconds)

      • Ron Greiner says:

        This is a good way to explain High Risk Pools:

        The repeal bill would also include provisions setting up high-risk pools, which would help provide coverage for people with pre-existing conditions [without driving costs up for everyone in the market], and expanding access to and use of Health Savings Accounts, the source said.

        The Columbus Dispatch beats the NCPA with an explanation and nobody there has a PHD. These Ohio reporter people are not even a non-taxed think tank.

  3. Barry Carol says:

    Maybe the California Hospital Association should think about what else most people would spend their money on if they didn’t have to spend so much for healthcare and health insurance. If employers didn’t have to spend as much for health insurance, they could afford to pay their people more in wages.

    People would then maybe buy a new car sooner than they otherwise would or update their home or take their family on a vacation or go out to eat more often or hire someone to cut their lawn. Most people outside of the upper end of the income distribution spend all or most of their income on one thing or another. I suspect that spending less on healthcare and needing fewer people to provide healthcare would be neutral at worst for overall employment and most likely positive as people have more money to spend on things they want as opposed to overpriced healthcare that they need.

    • Ron Greiner says:

      Correct Barry. 1/3 of California is on Medicaid, they are like crack whores addicted to Federal money. Gov. Jerry Brown and the beach-boys only hope is Republican Health Care Reform because:

      1. Age-based tax credits will help their Medicaid problem bigly

      2. The State, city and counties biggest expense is employer-based insurance so that is eliminated.

      3. State income taxes will rise because employer-based insurance is no longer such a huge exclusion and drain.

      Republican reform bails out California at least until the big earthquake.

      It sounds like you are becoming a Republican Barry. Welcome aboard!

  4. Ron Greiner says:

    Micheal Cannon of the CATO is at it again in the Dallas newspaper fighting Republican Reform to help employer-based health insurance. Price wants to limit the exclusion for employer-based plans to $20,000 a year but Cannon is there to save employer-based insurance:

    —If it’s not a GOP form of a Cadillac tax, “what the heck is your cap on the exclusion then?” said Michael Cannon, director of health policy studies at the libertarian-leaning Cato Institute.

    He expects “immense political push-back” to such proposals.
    “Most workers will just see ‘tax hike’ and say ‘no thanks,’ ” Cannon said. “That’s why the Cadillac tax has been delayed and probably won’t take effect, and why Ryan’s Cadillac tax is not going to work. Not only is it like Obamacare, it’s likely to fail.”—

    All of America’s non-taxed think tanks say they are against employer-based insurance and then do everything they can to help that deadly system.

    In 1997 I contacted Dr. John Goodman for his help to explain the dangers of employer-based insurance and he said, “My job is done, now it is up to you.” I have never seen a story from the NCPA that lists all of the reasons that employer-based insurance should be put down like the rabid dog that it is.

    Here is Cannon of the CATO in Dallas: