With unemployment stubbornly high and economic growth shrinking, it is clear the economy is headed in the wrong direction. And the Affordable Care Act is a major cause.
Employers are resisting hiring new workers, at least partly to avoid the high costs of the law's mandated health coverage. The health law will require all employers with more than 50 workers to provide health insurance or pay a fine of $2,000 to $3,000 per worker every year.
These added costs rob companies of money to grow their businesses and hire new workers. Small businesses will be hit hardest, and many say the requirement would wipe out their profits. This means less money to build restaurants and stores, reduced investment in research -- and fewer new jobs.
Before the law passed, optimism was high that health reform would cure the economy's woes. In 2009, the president's Council of Economic Advisers concluded that health reform would reduce unemployment, raise the labor supply and improve the functioning of labor markets.
But experience already is proving the report wrong. Consider these jarring developments:
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There are fewer incentives for people to enter the work force because they know they can get generous subsidies for health insurance whether they work or not. The Bureau of Labor Statistics reports 8.5 million people left the work force during President Obama's first term. The health law also imposes more than $1 trillion in new and higher taxes over the next decade -- an economic hit in its own right. And these taxes hit some sectors particularly hard. The industry that makes medical devices -- heart valves, artificial hip and knee joints, etc. -- faces $29 billion in taxes that threaten to cripple this dynamic new industry. Medical device companies must pay a new 2.3 percent tax on their revenues -- hitting even companies that make zero profit.
The best thing that Congress could do to stimulate economic growth and jobs creation would be to repeal the health law and go back to the drawing board, creating a law that would increase access to health insurance and stimulate genuine market competition to lower health costs without the huge distortions that the law inflicts.
Grace-Marie Turner is president of the Galen Institute, an organization funded in part by the medical industry.
