The biggest effect of Obamacare is obvious: Starting this winter, it will make it easier for tens of millions of Americans without health insurance to get it.
But Obamacare will also lead to big changes for workers who do have health insurance and for the firms that employ them.
Workers will find it easier to change jobs, and to enter and leave the labor force at will, without worrying that doing so will cause them to lose access to health insurance.
In other words, Obamacare will tilt power in the labor market away from employers and toward employees.
This is a big deal, and it’s a sleeper issue that animates the left-right fight over Obamacare even though it is rarely discussed in the open. Conservatives concerned that we are turning into a nation of “takers” see employer-provided health care as one of the few remaining forces that keeps Americans working.
Liberals don’t just want health coverage for all; they want workers to be able to press their employers for higher wages and better conditions, which they can more easily do if they’re less afraid of losing health insurance if they lose their jobs.
That change in the balance of power will affect the economy in a few ways, some good and some bad, but the effects look likely to be more favorable to workers than employers.
1. Obamacare might lead to fewer people working. As the Congressional Budget Office noted in a report months before Obamacare passed, “Increasing the availability of health insurance that is not related to employment could lead more people to retire before age 65 or choose not to work at younger ages.”
There’s been a lot of discussion of employer-side effects on employment under Obamacare. Will businesses decline to hire so they can remain eligible for favorable rules under Obamacare for small businesses? Will they shift workers to part time to avoid coverage mandates? Will small business owners facing tax increases due to Obamacare be less inclined to invest?
But these employee side effects are also important: Workers who aren’t dependent on a job for access to health insurance should be less inclined to take job offers, more willing to quit, and more likely to demand higher wages.
2. Freed from the search for health insurance, people might do better and more productive work. Economists call the current phenomenon “job lock”: people decline to take more appropriate job opportunities or start their own businesses because they do not wish to lose their current health coverage.
It’s unclear how important this effect is: Some studies find that workers without alternative access to health coverage are much less likely to change jobs, while others find no effect. (Brigitte Madrian’s 2006 paper provides a good overview.)
Here is a key observation for understanding the debate over Obamacare: point (1) describes a way the law might hurt the economy, and (2) describes a way in which it might help. But both (1) and (2) are bad for employers, and will force them to work harder to attract and retain workers. That helps explain why employer complaints about Obamacare don’t necessarily mean that it is bad for the overall economy.