The Obama administration launched a pre-emptive ad blitz on June 19, touting the Obama health law's benefits days before the U.S. Supreme Court will announce its ruling on ObamaCare's constitutionality. The ads claim there's a lot to lose if the law is struck down.
But they say nothing about the hiring boom that will result from an ObamaCare defeat. It would give the economy a shot in the arm.
If the justices rule that mandatory health insurance is unconstitutional, they will also strike down a big chunk of the health law — all of Title 1 — including the burdensome "Employer Responsibility" provision that has struck fear in the hearts of employers and deterred hiring.
Beginning in 2014, the "Employer Responsibility" provision would require employers with 50 or more workers to provide health coverage or pay a penalty. Not just any coverage, but a package of expensive benefits that the president deems "essential."
In most states, that requirement would add $1.79 per hour to the cost of a full-time employee. That would amount to the biggest hike in labor costs in American history. Employers in New York and New Jersey, where health plans are the most expensive, would be hit even harder.
There, according to economist James Sherk of the Heritage Foundation, the employer requirement would add more than $2 an hour to the cost of employing someone.
Many employers who already provide health plans will be hit with higher labor costs in 2014 unless the Supreme Court strikes down Title 1 or all of ObamaCare. The law takes away employers' option to provide low-cost mini-med plans, which are common in retail, fast food and other industries employing large numbers of low-wage workers.
Mini-meds cap what the insurer has to pay out in benefits over a year or a lifetime. Employers opt for them on the philosophy that providing low-cost coverage is better than none at all.
But ObamaCare outlaws this option. Andrew Puzder, CEO of a chain of Carl's Jr. and Hardee restaurants, testified before Congress that switching to the one-size-fits-all government-mandated health coverage would more than double his company's health insurance costs.
Employers can refuse to provide the mandated coverage in 2014, but those who do will be hit with a $2,000 per employee yearly penalty (applied to all but the first 20 employees). Spread over a year, the penalty would add 95 cents an hour to the cost of a full-time worker.
No wonder businesses are reluctant to add employees. According to a March 2012 survey by the U.S. Chamber of Commerce, 73% of small businesses said the Obama health care law made it more difficult for them to add new hires.
Hardest hit are the young, low-skilled workers on the bottom rung of the ladder. Any increase in labor costs historically hurts them the most. A report from Cornell University's Industrial Labor Relations Review (April 2012) shows that when the minimum wage was hiked in New York in 2007, employment among workers aged 16 to 24 dropped a staggering 20%.
The employer mandate in the Obama health law will have the same dire impact on young adults: joblessness. Unemployment rates are 50% higher for them than the overall adult population. Young adults are priced out of the market. Paradoxically, they seldom need costly health care. What they need is work.
At a campaign stop on June 12, presidential hopeful Mitt Romney blamed ObamaCare for the languishing jobs picture. Romney's right, but a Supreme Court defeat for the president's health law could give the economy a shot in the arm, increase hiring, and boost President Obama's chances of winning re-election in November.
McCaughey is former Lt. Governor of New York state and author of "The Obama Health Law: What It Says and How to Overturn It."
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