Economists reject Republicans’ claims that health law is decimating Kentucky jobs

Sept. 28--Key Republicans running for election Nov. 4 say the federal Affordable Care Act is putting Kentuckians out of work, but employment data and interviews with Kentucky-based economists suggest otherwise.

In a television ad, U.S. Rep. Andy Barr, R-Lexington, criticizes his Democratic challenger, Elisabeth Jensen, saying she "supports Obamacare, which has decimated Kentucky jobs." In an opinion piece, U.S. Senate Minority Leader Mitch McConnell said "there are so many stories about businesses holding back from expanding or hiring -- or even cutting back on their workforces -- it's hard to even count."

Politically, the frequently repeated claim might be effective. Polls show the health care law remains unpopular in much of Kentucky, although 521,000 people have obtained insurance coverage through it, some for the first time in their lives.

Factually, the claim doesn't appear to be accurate. Kentucky had 26,271 more people working last month than it did in March 2010 when President Barack Obama signed the Affordable Care Act into law, according to the U.S. Bureau of Labor Statistics. The state's unemployment rate in that same period fell from 10.5 percent to 7.1 percent.

Manoj Shanker, an economist at the Kentucky Office of Employment and Training, said the health care law "is expected to be a net gain for the economy."

"It is definitely expected to create jobs, and not just for doctors and nurses," Shanker said. "It will mean the creation of jobs in other areas, including clerical staff for processing claims, more receptionists, more pharmacy technicians and clerks, more janitors, orderlies and ambulance drivers."

About 3,600 additional health care jobs were created over the last year in Kentucky as places such as Perry County -- which has a 308-bed hospital, psychiatric facility, cancer care center and sundry medical clinics -- saw the percentages of their population without health insurance drop from as high as 20 percent to no more than 8 percent.

"I think the law is definitely going to stimulate the health care segment of our local economies, especially where we've seen substantial drops in the numbers of people who are uninsured. People who were forgoing medical care because they did not have insurance now can access it," said Glen Mays, a public health professor at the University of Kentucky who studies the economic effects of health care.

There are worrisome economic trends in Kentucky, economists say, such as the disappearance of good-paying jobs in manufacturing, construction and coal mining; an aging workforce that is expected to shrink and pay less in income taxes as Baby Boomers retire; and a surge, since the 2008 recession, in part-time jobs with few or no benefits. Many new jobs don't pay as well as the jobs they're replacing, and they don't offer the same security.

But these trends are long in the making and have little to do with the health care law, economists say.

"I would be wary of any claim about job loss because of the ACA, just based on the evidence in front of us so far," said Jose Manuel Fernandez, an economist at the University of Louisville who researches health care's fiscal impact.

Political rhetoric aside, Fernandez said, it can be difficult in many instances to prove that jobs are being gained or lost chiefly because of the health care law.

"It's been such a short run for the law so far, it hasn't been fully implemented, and it was started during a serious economic downturn that we're still recovering from. So it's not like we live in a world where the ACA is the only thing that's happened in the economy," he said. "I don't know how you separate out this one factor and say 'This is responsible for that.'"

Any companies that fired workers or cut workers' hours to part-time to avoid the cost of the "employer mandate" for insurance coverage were getting ahead of themselves, Fernandez said.

Companies that employ fewer than 50 full-time workers are exempt from having to provide health insurance, so that's most small businesses off the hook, he said. Obama delayed until at least 2016 the mandate for companies employing 50 to 99 full-time workers. Companies with 100 or more full-time workers have until next year to provide insurance to at least 70 percent of their workforce or face financial penalties.

"Honestly, I expect that the employer mandate won't ever be enforced," Fernandez said. "I predict that we'll see it tossed out in a political compromise because it's so unpopular. And if you already have the individual mandate and people are buying insurance through the health exchanges, then it's not really necessary."

The Robert Wood Johnson Foundation, a philanthropy devoted to public health, estimates that the employer mandate is set to make a negligible difference in the number of Americans with insurance: 251.1 million with the mandate compared to 250.9 million without it.

Dueling studies

Kentucky last year established Kynect, its health insurance marketplace, including expanded Medicaid for adults earning up to 138 percent of the federal poverty level. (That's $15,856 for an individual and $32,499 for a family of four.) Around that time, dueling studies came out forecasting varying degrees of job loss or job gain because of the health care law.

Owners of McDonald's, Dunkin Donuts and other fast food outlets gave members of Congress a study by the conservative Hudson Institute predicting that 3.1 million "potential jobs" in their industry were "at risk" due to the law's employer mandate. Rather than offer insurance, franchise owners would fire workers, not hire them or cut their hours below 30 per week to make them ineligible, they said. The "at risk" franchise jobs total for Kentucky was 56,351.

In March, the Republican Party of Kentucky posted an online essay, Ten Ways Obamacare is Hurting Us, that included "losing 2.5 million jobs." The GOP cited as its source a report issued the previous month by the nonpartisan Congressional Budget Office. The Barr campaign recently cited the CBO report as well to support its claim that the health care law "decimated Kentucky jobs."

But the CBO report didn't say 2.5 million jobs have been or would be cut. The CBO predicted that some people whose incomes are approaching the cutoff for federal subsidies to help pay for their insurance will choose to reduce their hours in order to keep the subsidies. Also, the CBO said, expanding Medicaid or providing subsidized policies to more people could encourage some Americans to forego undesirable jobs they otherwise would have taken just for the health coverage.

The voluntarily reduced supply of labor could be the equivalent of 2 million full-time jobs by 2017 (out of a civilian labor force of 156 million), rising to about 2.5 million by 2024. Overall, the economy is expected to continue adding jobs during this period, the CBO said.

"The estimated reduction stems almost entirely from a net decline in the amount of labor that workers choose to supply rather than from a net drop in business' demand for labor," the CBO wrote. "In the agency's judgment, the effects ... will be small or negligible for most categories of workers."

Healthier workforce

Democratic Gov. Steve Beshear's administration, which champions the ACA, put forward its own sets of numbers in 2013, largely focused on the economic impact of expanding Medicaid to more Kentuckians. As of July, 316,692 Kentuckians were enrolled in expanded Medicaid -- far more than the state expected.

The University of Louisville Urban Studies Institute issued a report predicting 16,723 new Kentucky jobs by 2020, of which 9,212 would come directly from increased Medicaid spending at health care employers, such as hospitals, pharmacies and insurance companies. The rest would come from the indirect economic benefits of the spending.

Similarly, a research paper from the Kentucky Cabinet for Health and Family Services forecast 16,700 new jobs by 2021 as a result of Medicaid expansion, with an average salary of $43,000.

This will happen several ways, the authors wrote. More money will be pumped into the health care industry once more people can afford to see a doctor and pay for treatment; people enrolled in federal disability programs because they want Medicaid benefits might look for work now that they can keep their Medicaid; and a healthier population will make for a stronger, more stable workforce.

In 2013, Kentucky had among the nation's worst rates of obesity, high cholesterol, diabetes, heart attacks, cancer, bad teeth, smoking, drug abuse and poor mental health. It also had -- prior to the health care law -- 640,000 uninsured people, many of whom could not afford services such as routine physical exams that can catch diseases early, smoking cessation programs or addiction treatment.

For an employer looking for a place to locate, that's not an attractive picture, the authors wrote. For a low-wage worker without sick leave or insurance, such as a waitress, an illness could lead to unemployment and even bankruptcy.

"Right now, with the ACA, if you're sick you can get medical treatment and not miss a week of work and not maybe lose your job over it," said Fernandez. "It's the difference between someone in your community getting to keep working or not."

John Cheves: (859) 231-3266. Twitter: @BGPolitics. Blog: bluegrasspolitics.bloginky.com

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