A recent CBO report says Obamacare will cause some Americans to work less. It makes no mention of the most economically important thing they might do next.
The federal government talks a good game when it comes to entrepreneurship. It doesn't always play a good game. But when it comes to the effects of Obamacare on new entrepreneurs, even the talk is missing.
When legislators need to pass a law, small business is right up there with apple pie on the very short list of unassailable rationalizations that Congress trots out again and again. Every administration periodically invites groups of small-business owners to the White House, ostensibly to hear out their concerns and get better at lending a helping hand.
But the spat over a recent Congressional Budget Office report discussing the effects of Obamacare on the labor market, and the response to the document, shows that Washington doesn’t actually think about entrepreneurs and the role they play in productivity and new job creation. Even though we're talking about making health care more accessible, and getting affordable health insurance has long been a huge obstacle to many would-be entrepreneurs.
In the report, the CBO estimates that, because of the Affordable Care Act, some Americans will work less. Some will stop looking for jobs, because they don’t need an employer to have affordable health insurance. Some will work fewer hours, either so they remain eligible for Medicaid or so that they don’t make too much money to qualify for subsidies meant to help lower-income people buy insurance on the exchanges.
All in all, estimates the CBO, these adjustments will reduce the supply of labor by the equivalent of more than two million full-time jobs. It's not clear if that will also mean some of that work is available to people who are currently unemployed.
Appendix C, which includes the Obamacare discussion, begins on page 117 of the report. It does not say anything about the folks who will work less to take care of their kids or of older family members, or who will choose to retire a year or two earlier. It also does not say a thing about entrepreneurship--where we might see a real impact on the economy.
Because it’s not just people wary of losing their subsidies or parents who want to see more of their kids who are going to suddenly find themselves less securely tethered to their day jobs. It’s people who have long wanted to become entrepreneurs, and just weren’t willing to make the leap if it meant they had to give up health care for themselves and often, their families.
I don’t expect the CBO to know how many people are going to quit their jobs to start their own businesses. I also don’t expect the CBO to try to estimate how many of those businesses will be successful or how many other workers they’ll eventually employ. No one knows that.
But you know what else? No one knows how many disabled people will decide to work either more or fewer hours as a result of the law, either. But with that issue, the CBO does its best. It looks at the factors that might encourage disabled people to work more, as well as factors that would encourage them to work less, and concludes that it can’t tell how things will shake out. That’s not a dramatic conclusion, of course, but the CBO does provide a thoughtful, albeit brief, discussion that provides some analysis and guidelines for anyone who wants to take the issue further.
That’s all I’m asking for. Take entrepreneurship seriously. Give us a decent discussion. Admit that a lack of health insurance has been a serious constraint on entrepreneurship, and that finally, we’re removing it. And that that’s bound to have an economic impact, even if we don’t know precisely what it will be.
Of course, we don’t know how many new entrepreneurs we’re creating with this law, or what their impact will be. But it’s well known that the vast majority of new jobs come from small companies, which the report does discuss. Those small companies don’t come from thin air. They come from the efforts of entrepreneurs. From individuals who leave their jobs--and are now more able to do so--to take big risks and try to create something new and different. Is it too much to ask Washington to recognize that?
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