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Blog - Affordable Care Act, Jobs, and Employer-Sponsored Insurance: A Look at the Evidence


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By Kathleen Sebelius

Since the Affordable Care Act became law in 2010, health care cost growth has been lower than in the past -- and lower than was projected when the law passed almost three years ago.

Private health insurance premium growth per person was slower than overall economic growth in 2011, and a new survey by Towers Watson/National Business Group on Health found that the growth in employers' costs for employee health benefits in 2012 was at its lowest in 15 years.

Also, a recent indepth analysis by USA Today found that, "cost-saving measures under the health care law appear to be keeping medical prices flat."

But ever since the health care law was debated in Congress, we have seen a lot of misinformation, which often leads to misunderstanding of the law itself and how it benefits consumers and businesses, both large and small.

For example, back in October 2010, the Beige Book from the Federal Reserve reported that some employers anticipated increased costs of employee benefits immediately as a result of health care reform, and last week's Beige Book has been cited by some long-time critics as suggesting jobs are not being created because of employers' uncertainty about how the law will affect them.

However, when assessing the impact on labor markets, there is both analytical and anecdotal evidence that tells the real story. For example, the Congressional Budget Office (CBO) projected that the reduction in labor would be minimal--at roughly half a percent--and would result almost exclusively from employees deciding to retire early or voluntarily work fewer hours.

There is also a real-life example of how a similar law affected the labor market. The experience in Massachusetts is consistent with the CBO projections. Studies found no negative impact on the labor force in the State after it implemented similar reforms in 2006. In fact, there may have been a shift toward full-time work as workers sought to gain access to their employers' plans to avoid the individual responsibility penalty in the State.

And, last week's job report suggests that private job growth is strong. The economy has added private sector jobs for 36 straight months, for a total of nearly 6.4 million jobs during that period. The service sector -- the source of many of the questions about the health care law -- led the way in monthly job creation in February.

In addition, some initial statements made by CEOs about scaling back full-time workers have now been reversed. For example, the CEOs of chains such as Applebee's and Papa John's Pizza have called their earlier statements about reducing hours premature. The CEO of Darden, owner of chains like the Olive Garden, stated: "As we think about healthcare reform, while many of the Patient Protection and Affordable Care Act's rules and regulations have yet to be finalized, we are pleased we know enough at this point to make firm and hopefully reassuring commitments to our full-time employees."

Over time, many provisions of the health care law will work to create a more efficient, higher quality health care system and slow the growth of health care. This is not just good for the health system, but it is good for American jobs and the economy.

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