Study: Obamacare could send 1 million workers to welfare

Health insurance is so important to many Americans that it’s the only reason they have jobs. That’s what a new study concludes, and it could pose substantial problems for the Affordable Care Act.

The study, “Public Health Insurance, Labor Supply, and Employment Lock” by university professors Craig Garthwaite, Tal Gross, and Matthew J. Notowidigdo, is the latest indictment of Obamacare. If childless, lower-income adults can get insurance through the Affordable Care Act’s Medicaid expansion, as many as 1 million could quit their jobs.

The study looks at Tennessee’s 2005 move to discontinue an expansion of TennCare, the state’s Medicaid arm. Many of the 170,000 who lost coverage then are the same people Obamacare targets with its expansion. The researchers found a segment of the population in “employment lock,” holding jobs solely to get affordable health insurance.

How? The team found a “large and immediate labor supply increase” concentrated among those working more than 20 hours per week who reported having private, employer-provided insurance. Not only that, researchers found “a similarly large increase” in private insurance enrollment, suggesting public options previously “crowded out” private options. The increases were not only immediate but “steady.”

What does this mean for Obamacare? New state-run insurance exchanges will provide heavily subsidized or free insurance to many who have never qualified for public insurance—very similar to the TennCare expansion that ended in 2005. The plan, researchers say, moves to “weaken the link between employment and health insurance."

Using estimates derived from Tennessee, researchers predict employment for people who previously made too much to qualify for Medicaid will fall between 530,000 and 940,000: “This would represent a decline in the aggregate employment rate of between 0.3 and 0.6 percentage points from this single component of the ACA.” Because these new Medicaid qualifiers would drop out of the labor force, it wouldn’t necessarily affect the official unemployment rate. But it would affect Obamacare’s bottom line and increase dependency.

The state exchanges are supposed to launch Oct. 1 as the healthcare law limps forward. If all states implement the Medicaid expansion, the team said, about 4.2 million people currently employed and privately insured could move onto public coverage—perhaps 60 percent more than congressional estimates. President Barack Obama has decided to delay the law’s employer insurance mandate, partly because it led many companies to cut employee hours to avoid the mandate’s threshold. But the move is leaving many people in the lurch—the individual mandate remains in effect. The House will vote today to delay the individual mandate, but it’s only a statement and has virtually no chance of success, as both the Senate and White House oppose it.

This new study has not been peer reviewed, and the research team takes pains to caution people from reading too much into its findings. But with the similarities between the TennCare and Obamacare situations, the results “could be substantial” and are too significant to ignore.

Read more of WORLD’s coverage of Obamacare consequences here.