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New ObamaCare Losers: Public Employees

Earlier this week, Health and Human Services Secretary Kathleen Sebelius mocked the idea that ObamaCare is costing people their jobs. Sebelius even went so far as to say that “every economist will you tell you” that there is no evidence of job loss. According to her, the whole idea of economic suffering related to the misnamed Affordable Care Act is a “myth.” While that kind of hyperbole is easily exposed (Every economist? Really?), ObamaCare critics don’t need to beat the bushes to find conservative economists to counter that assertion. All they need to do is to read today’s New York Times.

The number of those who have already been hurt by ObamaCare are legion, including millions of individual purchasers of insurance who have lost their coverage or been denied the ability to keep their doctors in spite of President Obama’s promise to the contrary. But it’s long been accepted that the employer mandate will eventually reduce the number of full-time workers because of new rules about coverage requirements. Yet it turns out that those affected are not just employees at small or mid-sized companies. The impact on one of President Obama’s key support group turns out to be just as bad. As the New York Times reports:

Cities, counties, public schools and community colleges around the country have limited or reduced the work hours of part-time employees to avoid having to provide them with health insurance under the Affordable Care Act, state and local officials say.

The cuts to public sector employment, which has failed to rebound since the recession, could serve as a powerful political weapon for Republican critics of the health care law, who claim that it is creating a drain on the economy.

President Obama has twice delayed enforcement of the health care law’s employer mandate, which would subject larger employers to tax penalties if they do not offer insurance coverage to employees who work at least 30 hours a week, on average. But many public employers have already adopted policies, laws or regulations to make sure workers stay under that threshold.

Sebelius was as wrong about the question of ObamaCare’s impact on employment as she was about the rollout of the law’s website. But the problem for the administration isn’t just a credibility gap that was already as big as the Grand Canyon. It’s that the ranks of ObamaCare losers are now growing and being filled by people that are the backbone of the Democratic Party. That means the real myth about ObamaCare is the assumption that once it goes into effect it will be transformed from an unpopular law to a beloved national institution like Social Security.

The findings of the Times report validate the conclusions of the Congressional Budget Office study released earlier this month on the impact of ObamaCare on employment. Though administration figures like Sebelius have been orchestrating a campaign seeking to deny these facts, the Times story illustrates the futility of this effort. Municipalities and public institutions around the country have been cutting the hours of their workers in order to avoid paying for their health care. Thus even though the point of the Affordable Care Act was to get more people covered, the unintended consequence of its passage was to cut the pay as well as deprive a significant population of public-sector workers of their chance to get insurance from their employer.

As the article notes, public workers are being especially hard hit because municipal employers can’t pass along the increased costs of the insurance mandates to consumers the way private companies can try to do. Instead, they must cut down on the number of those they employ. But rather than reduce the ranks of those public employees getting expensive benefits and pensions that often are far more generous than those received by the taxpayers who pay their salaries, the people losing out in the ObamaCare squeeze are those at the bottom end of the wage scale.

These findings once again point out the problem with the administration’s belief that their ObamaCare troubles are merely the result of a rough rollout and will soon disappear. It is true that millions of Americans who are either poor or have pre-existing medical conditions will be net winners as a result of ObamaCare. But unlike government entitlements like Social Security and Medicare, ObamaCare has also created a vast number of net losers who are losing coverage, losing jobs, or getting their hours and possible benefits cut.

The fact that a large number of those losers are members of a demographic that is a key element of the Democratic base is a potential political disaster for the president’s party. Rather than going away as the midterms approach, if the Times is to be believed, it is getting worse. In this case, the Democratic focus on income inequality appears to be pertinent. But rather than being able to blame the plight of low-income workers on the wealthy or the Republicans, it is President Obama’s signature accomplishment that is to blame.