Washington Health Policy Week in Review Archive

Washington Health Policy Week in Review is a weekly newsletter that offers selected stories from the daily newsletter CQ HealthBeat.

  • September 13, 2010 Issue
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Health Care Battle Framed as a Jobs Issue on the Campaign Trail

By Rebecca Adams

September 10, 2010 -- With voters identifying the economy and jobs as their top concerns this election cycle, opponents of the new health care law are attempting to link the two by reprising their argument that the overhaul will be a "jobs killer."

National Republican Campaign Committee spokesman Paul Lindsay says voters will see "Republican candidates and their allies holding Democrats accountable for the job-killing effects of the government health care takeover."

The message is being supported by groups that share the philosophy. "Everything we talk about, all our political messaging, comes back to the health care law," said Stephanie Cathcart, spokeswoman for the National Federation of Independent Business, which joined a lawsuit challenging the law. "It's an obvious example of something that has passed and is increasing costs" for employers.

Democrats, meanwhile, are countering by saying the law will help businesses with costs that have been rising for years. "The idea that this kills jobs is ridiculous," said Erikka Knuti, spokeswoman for the Health Information Campaign, a new group that plans to spend $125 million over the next five years, including $2 million on ads it has already produced, defending the law.

Last year the liberal Center for American Progress estimated that the law could create an average of 250,000 to 400,000 new jobs per year over the next decade, with job growth accelerating throughout the period. House Speaker Nancy Pelosi, D-Calif., used those numbers when the law was passed to say it would add four million jobs, including "400,000 jobs almost immediately."

Now those words are being used against her. DeFundIt.org, a group that wants Congress to strip funding for the law, released a web ad last week showing her making the prediction, followed by clips of Republicans challenging it. It features Rep. Peter Roskam, R-Ill., on the House floor with closed eyes. "See if you hear the sound of jobs. Shhh," he said. "Well, I don't hear anything."

The group is targeting Democrats in competitive districts, such as Reps. Rick Boucher and Glen Nye of Virginia and Chet Edwards of Texas.

A Complicated Question

The reality is that it's probably too soon to assess the law's long-term economic effects. Some provisions will benefit businesses directly, and others will cost them. However, health policy experts and academics do not expect it to have a major net impact on job creation, either positively or negatively, in the next couple of years.

"Despite fears expressed by some in the political arena, health reform is not likely to have a significant direct effect on the U.S. economy or on employment," wrote Urban Institute researcher John Holahan in August. "The changes in spending and taxes in health reform generally have offsetting effects and are simply too small relative to the overall size of the economy to have much of an impact."

On the positive side, businesses can benefit this year from a temporary reinsurance program for firms that give coverage to retirees over age 55 who are not eligible for Medicare.

The law also includes a small-business tax credit that took effect this year. However, the Congressional Budget Office estimated last year that in 2016, only about 12 percent of people who get coverage in the small group market would benefit, in part because the credit is temporary and limited to firms with fewer than 25 workers who earn less than an average of $50,000.

Some business owners say the law creates general uncertainty, and they fear it could raise their administrative costs. This year, changes in insurance rules will require many companies to revise their policies at a time when they are usually already sending out details about coverage.

In the longer run, the law's impact is complex. Businesses with 50 or more workers will typically have to pay for insurance for their workers starting in 2014 or potentially face a fine, but smaller businesses would be exempt from the requirement.

New insurance exchanges could allow some small companies to buy insurance at group rates that are less than they would otherwise pay or could allow some workers to buy insurance on their own.
The law's effect on large employers, who provide most private coverage in the United States, is expected to be minimal.

Within the health care sector itself, the law will lead to greater coverage and a greater demand for medical services, which should increase jobs. But it also contains stricter Medicare cost controls and new taxes and regulations on companies such as medical device and drug manufacturers, which could reduce jobs.

Over the next 10 years, wrote Holahan, there will be "many other forces that will have a much greater impact on economic activity" than changes in health care. These are subtleties, though, that are likely to be lost in the noise of the campaign trail.

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