Obamacare May Cause Some Workers to Quit, But That’s OK

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“The United States is unique among industrialized countries in its tight linkage between health insurance and employment,” began a National Bureau of Economic Research working paper, regarding the effects the Affordable Care Act could have on the labor market. “Government health insurance programs cover the disabled, low-income parents, and those older than 65, but few other adults qualify for public coverage. Americans without access to public or employer-provided insurance can purchase health insurance through the individual, nongroup market, but that market is believed to face adverse-selection pressures. As a result, many Americans can only access affordable health insurance through their employer, and thus expansions of public health insurance can have large effects on the labor market.”

Some analyses have indicated that the Affordable Care Act would create a “pathway from work to welfare.” The fear is that employers will cut workers’ hours to part-time so that the number of hours worked per week fall below the 30-hour-per-week cutoff designated by the employer mandate of Obamacare; thirty-hours-per-week being the point in which companies with 50 or more full-time employees must provide insurance coverage.

That fear is well-based, given the fact that companies like Wal-Mart (NYSE:WMT) have been hiring just temporary workers in recent months, but the health care reform may have have other, more beneficial effects, on the labor market. Craig Garthwaite of Northwestern University’s Kellogg School of Management, Tal Gross of Columbia University’s Mailman School of Public Health, and Matthew J. Notowidigdo of the University of Chicago’s Booth School of Business said in their NBER paper that while approximately 800,000 low-income Americans may quit their jobs after the health care reform is fully implemented, that might not be a problem.