Federal Reserve survey: Obamacare is hurting the economy

September 30, 2014
Santiago, Chile

Earlier this month both the New York and Philadelphia Federal Reserves published the results of a survey they conducted asking business owners how the Affordable Care Act has changed how they operate.

Bear in mind, healthcare reform was sold on the basis that it would be good for the American people and good for the US economy.

Their economic reasoning was that the amount of money currently being spent on medical care in the US would be reduced. And that spending would shift to more productive areas of the economy.

But then, earlier this year, it turned out that the exact opposite happened.

Healthcare spending as a proportion of GDP had actually gone UP rather than down after the introduction of Obamacare.

So then the government flipped the message around. Suddenly the healthcare spending increase wasn’t a sign of failure, it was a sign of success!

That extra 0.1% of GDP that came from increased government spending in the last quarter of 2013 was all that kept the US from slumping back in to recession. Thus, Obamacare had saved the economy!

Now the Fed is chiming in with its own data showing that, in general, Obamacare has had a negative impact on the labor market.

21.6% of firms surveyed said that they were going to employ fewer workers as a result of the Affordable Care Act.

And another 20.2% said they were shifting from full-time employees to a part-time workforce as a result of the law.

Only 2.3% said there was a beneficial impact to employment as a result of the Act, and a whopping 81.4% of businesses said that their per-employee costs were increasing as a result of the Act.

Moreover, 36.4% of businesses plan on increasing the prices they charge their customers as a result of the Act, essentially passing on the costs of the legislation to consumers.

As for the quality of care itself, a survey of 3,072 physicians nationwide by medical HR firm Jackson Cocker showed that 44% of physicians are not planning to participate in the ACA network. Only 32% are participating or plan to join.

And incredibly, 60% of physicians surveyed said they expected the quality of patient care to be negatively impacted as a result of ACA, vs. only 14% who thought the law would have a positive impact.

None of this sounds particularly beneficial to the economy, or to the American people.

It was a really noble and compassionate idea. All they wanted was to help people who don’t have access to quality medical care.

But the execution was a total failure, both in deed and concept.

You cannot legislate your way to high quality medical care any more that you can legislate sunshine.

It’s the entire system that’s broken.

There’s too much expensive regulation, cost prohibitive malpractice insurance brought on by frivolous lawsuits, shortages in workers with critical skills, and crippling taxes that take away much of physicians’ financial incentive to practice medicine.

There are so many things wrong with this picture, and many of them are caused by the absurd amount of laws already on the books.

This isn’t something you fix by passing even more laws. That has the exact opposite effect.

About the Author

Simon Black is an international investor, entrepreneur, and founder of Sovereign Man. His free daily e-letter Notes from the Field is about using the experiences from his life and travels to help you achieve more freedom, make more money, keep more of it, and protect it all from bankrupt governments.