Obamacare apparently led to a drop in healthcare spending that stifled the economy in the first quarter, and some experts say that trend will be lasting.
GDP shrank 2.9 percent in the first three months of the year, partly because healthcare spending dropped as Americans seemed to have signed up for Obamacare but had not paid for it yet.
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“It is amazing that healthcare spending’s contribution to first-quarter growth went from an initial estimate of plus 1.1 percentage points to minus 0.16 of a percentage point," economist Joshua Shapiro of MFR wrote in a commentary obtained by
International Business Times.
"This is a crazy-sized revision, and speaks very loudly to the fact that nobody has a real handle on how the introduction of Obamacare has affected these data, nor for how long the distortions may last until things settle down."
After the initial estimate of a healthcare spending increase, the Obama administration argued that the Affordable Care Act was boosting the economy.
"Using the White House analysis, the lack of increased consumer spending on healthcare indicates that the economy-tamping effects of Obamacare will outstrip whatever consumer impulses it produces, even when consumer use should be highest, as people gain coverage and can access provider networks for the first time," political analyst Edward Morrissey writes in
The Fiscal Times.
"Get ready for more dampening effects on the economy from Obamacare, too. The employer mandates will soon come into force for most businesses, which now have to make decisions on staffing, hours, and benefits for their 2015 budgets."
Investor's Business Daily cites 400 mid-size and large companies that will or already have cut employee hours to avoid the full-time classification that would make them offer health insurance or pay fines. The evidence shows that businesses are indeed trimming their workers' hours, Morrissey says.
"As businesses cut hours and postpone or cancel expansion plans, fewer jobs are created and workers who do have jobs earn less money," he writes.
"That soft labor market also hampers wage growth and has a dampening effect on consumer spending. That’s before the cost of Obamacare hits the workers themselves."
University of Chicago economist Casey Mulligan agrees that Obamacare is hurting the economy.
"Can we begin to take seriously the idea that the fiscal policies and regulations hidden in the Affordable Care Act are shrinking our economy?" he writes on
Real Clear Markets.
"Politicians and journalists use the term tax more narrowly than economists do, but the economic definition is needed to understand the economic effects of the ACA."
Withholding benefits from people who work amounts to an implicit tax, Mulligan says.
"What really matters for labor market performance is the reward to working inclusive of implicit taxes," he writes.
"The ACA . . . is full of implicit taxes. Many of them have remained hidden in the fog of controversy surrounding the law."
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