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It’s one of our favorite editorial topics: The law of unintended consequences. And most often here, we are speaking of actual laws, not theoretical ones.
As the presidential debate unfolds, both sides promise to grow the economy and create more jobs. Each candidate has different strategies to do so, but as we consider their plans, we should look behind the surface impact their policies may have and peer off into the horizon at what the eventual results might be.
Take, for instance, the Affordable Health Care Act, aka Obamacare, the health care reform law passed by Congress in 2010. The law has several components, some earning bipartisan support, some much more contentious.
The law, upheld earlier this year by the Supreme Court, remains front and center in the presidential campaign. President Barack Obama made health insurance reform a key element of his 2008 campaign and wants to keep it in place. Challenger Mitt Romney wants to toss it out and replace it with something different.
Yet beyond the politics and how the law affects individuals, we were reminded last week of one negative consequence it has created. Darden Restaurants Inc. — the nation’s second largest chain, operator of Olive Garden and Red Lobster — says it will shift more workers to part-time status in some of its locations to avoid fines for not providing health insurance for full-time workers and their dependents.
Other companies in the retail and hospitality industries soon may follow suit. That not only means no insurance for those workers, but likely less pay as well when their hours are cut.
Under the law, companies with 50 or more workers could be fined for not providing coverage. That would put small businesses in a bind, driving up labor costs in a struggling economy. And rest assured, any company that employs 51 workers is likely to lay off two workers to duck the requirement.
And that reaction to the law may lead to a countermove, where legislators may seek to limit such personnel changes.
Where will it end? We’re not sure, but anything that puts government at odds with small businesses is not good for the economy or for job growth.
Providing insurance is expensive for small companies. Because health insurance has been linked to employment — which isn’t the case for other kinds of insurance — businesses bear more of the rising costs in order to pay their share of workers’ policies. Workers themselves are paying more, too, and may be earning fewer and lower raises because of it.
Surely everyone wants and needs health coverage, but businesses exist to make a profit, not provide benefits. If those benefits undercut the bottom line to too great an extent, it means lower pay, fewer jobs and helps no one.
This comes at a time when the economic recovery remains sluggish, unemployment and underemployment rates still are high and jobs are hard to come by for many. Policies that penalize business are not going to ease those problems.
The insurance mandate is one more way the federal government is squeezing small businesses, where 60 percent or more of U.S. workers earn their pay. Heavier regulations and the threat of tax hikes won’t encourage business owners to expand and hire more people. And when businesses are squeezed, so is the middle class, in two ways: Fewer jobs are available and the costs of goods and services increase for everyone.
But perhaps this really isn’t an unintended consequence after all. Obama’s health law was a compromise of sorts and still involves the private sector in health insurance, despite the preference of many in his party to install a single-payer, government-run system. By seeing more workers dropped from employer insurance rolls, it could strengthen the push from the left to create a more all-encompassing federal plan to cover those who can’t get private insurance.
Health insurance reform was both needed and overdue, but more government control of the industry can only lead to more laws, higher taxes and possibly threaten the quality of care. What Americans need are more choices, not fewer, which won’t result from a one-size-fits-all plan. Insurance should be portable, affordable and provide more options. And like it or not, only the free market can provide that level of choice.
Obama says his health plan was based on the state-run plan Romney passed in Massachusetts. Romney says his plan worked because it was applied at the state level and was not an expensive, and expansive, federal program.
We think smaller is better, and that wise health care reform will get more people insured at lower costs without creating mandates that trigger painful trickle-down repercussions. Any plan that puts businesses in the position of cutting full-time jobs to avoid penalties is the kind of top-down approach that creates a new set of problems than those it aims to solve.
Our health insurance system is not broken because of free markets; it is broken partially because of restraints and penalties put upon the free market, limiting its ability to offer more affordable choices.
And while there clearly is no easy answer to this complex puzzle, it’s hard to see how the current law will benefit more Americans in the long run if it hurts our economy in the process.